In Some Ways It Was a Bad Year

In some ways it was a bad year

Annual Report 2006 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 In other ways it was a good year

Annual Report 2006 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 If you want to learn more about Wienerberger and there is no order card attached, you can ask for our annual or quarterly reports or add your name to our mailing list by contacting us at T +43 (1) 60192-463 or [email protected] All’s well The Year 2006 in Review

Wienerberger met all its growth and earnings targets for 2006 in full: Group revenues rose by that ends well! 14% to € 2,225.0 million, EBITDA by 10% to € 471.9 million and EBIT by 11% to € 299.6 million.

However, the year brought a wide range of different developments. On the one hand, we were confronted with adverse weather, start-up costs for a number of new plants and higher energy prices during the first half of the year.The slump in US residential construction triggered a decline in sales volumes and revenues on our largest single market, the USA, and we were unable to completely offset this development with the acquisition of Robinson Brick. On the other hand, we utilized the stronger demand in Europe to significantly increase sales volumes and implement necessary price adjustments, and the unusually mild weather at the end of the year made it possible for construction to remain strong during the fourth quarter.All in all, the year 2006 confirmed the success of our growth strategy and the strength of our geographic portfolio.

Wienerberger also recorded double-digit growth of 11% in earnings per share, which rose to € 2.95. The Managing Board will therefore recommend that the Annual General Meeting approve a 10% increase in the dividend to € 1.30 per share.

The Annual Report and Annual Financial Statements for 2006 We also continued our expansion strategy with a total of € 430 million for growth invest- were presented at the press conference on March 27, 2007 and ments in 2006. About 50 projects (acquisitions, new plant construction and capacity increases) were at the 138th Annual General Meeting on May 10, 2007 in Vienna. started or realized during the reporting period. In order to ensure that we have sufficient financial Available in German and English. flexibility to pursue this growth course in the future, we issued a € 500 million hybrid bond in February 2007.

Market Positions

Publisher: Wienerberger AG, A-1100 Vienna, Wienerberg City, Wienerbergstrasse 11 Wienerberger is the world’s largest producer of bricks and Nr. 2 on the clay roof tile market in T +43 (1) 601 92-0, F +43 (1) 601 92-466 Europe. We also hold leading positions in pavers in Europe, with a total of 259 plants in 25 countries. [email protected], www.wienerberger.com Wienerberger Annual Report 2006 Inquiries may be addressed to: Hollow bricks: Nr. 1 worldwide The Managing Board: Wolfgang Reithofer, CEO, Willy Van Riet, CFO Investor Relations: Thomas Melzer Facing bricks: Nr. 1 in Europe, co-leader in the USA

Revenues and EBITDA Margin EBITDA and EBIT Equity and Net Debt Earnings Data 2004 2005 2006 Change in % Corporate Data 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 CAGR 97-06 in € mill. and % in € mill. in € mill. Revenues in € mill. 1,758.8 1,954.6 2,225.0 +14 Revenues in € mill. 1,113.7 1,143.3 1,337.5 1,670.3 1,544.9 1,653.7 1,826.9 1,758.8 1,954.6 2,225.0 8% EBITDA 1) in € mill. 405.4 428.4 471.9 +10 EBITDA 1) in € mill. 240.7 258.2 308.9 403.4 202.2 323.1 349.9 405.4 429.3 476.6 8% 40 % 500 1,750 2,225.0 471.9 1) 2)

1,591.4 EBIT in € mill. 257.5 270.3 299.6 +11 Operating EBITDA in € mill. 226.3 231.4 274.5 307.8 221.2 302.6 349.9 405.4 428.4 471.9 9% 428.4

1,954.6 1,500

405.4 2) 400 1,483.1 Profit before tax in € mill. 231.4 251.3 277.3 +10 EBITDA margin in % 20.3 20.2 20.5 18.4 14.3 18.3 19.2 23.1 21.9 21.2 1,367.2 1,758.8 30 % 1,250 1) 1,159.8 Profit after tax in € mill. 181.8 196.4 218.3 +11 EBIT in € mill. 131.1 162.6 187.8 254.3 -25.8 151.9 190.2 257.5 269.6 297.5 10%

299.6 300 1,000 2) 2) 270.3 934.4 Free cash flow in € mill. 295.8 223.8 272.1 +22 Operating EBIT in € mill. 116.7 135.8 153.4 158.7 66.2 151.6 190.2 257.5 270.3 299.6 11% 257.5 23.1 21.9 20 % 21.2 762.4 200 750 Maintenance capex in € mill. 90.4 88.2 100.2 +14 Profit before tax in € mill. 117.5 163.1 178.6 228.3 -62.7 119.5 154.3 231.4 251.3 277.3 10% 500 Growth investments in € mill. 542.2 250.5 430.2 +72 Profit after tax in € mill. 101.4 116.5 124.7 201.4 -17.8 85.9 113.1 181.8 196.4 218.3 9% 10 % 100 1) 7) 250 ROCE in % 9.7 8.9 8.8 - Free cash flow in € mill. 203.2 124.5 98.0 244.0 241.3 237.3 274.6 300.7 212.5 272.1 3% CFROI 1) in % 12.9 12.2 12.0 7) - Total investments in € mill. 117.5 301.8 500.7 287.1 228.0 181.3 392.6 632.6 338.7 530.4 18% 0% 0 0 2004 2005 2006 2004 2005 2006 2004 2005 2006 Employees 3) 12,154 13,327 13,639 +2 Net debt in € mill. 143.7 249.1 573.1 604.8 674.1 618.5 739.0 762.4 934.4 1,159.8 26%

Revenues EBITDA Equity Capital employed in € mill. 797.6 936.1 1,297.7 1,568.5 1,613.9 1,508.7 1,635.4 2,031.5 2,289.4 2,598.2 14%

EBITDA margin EBIT Net debt Balance Sheet Data 2004 2005 2006 Change in % Gearing in % 19.0 29.7 62.2 54.5 66.9 63.6 75.2 55.8 63.0 72.9 Equity 4) in € mill. 1,367.2 1,483.1 1,591.4 +7 Interest cover 3) 13.8 282.2 10.7 5.2 -0.7 4.4 5.3 7.7 6.2 6.2 Net debt in € mill. 762.4 934.4 1,159.8 +24 Return on equity 4) in % 13.7 14.3 14.0 18.6 -1.8 9.0 11.5 13.3 13.2 13.7 Capital employed in € mill. 2,031.5 2,289.4 2,598.2 +13 ROCE 2) in % 12.0 9.5 7.4 7.8 4.0 7.1 8.4 9.7 8.9 8.8 9)

2) 9) Earnings per Share ROCE and CFROI Free Cash Flow and Balance sheet total in € mill. 2,865.9 3,269.6 3,674.3 +12 EVA in € mill. 24.2 5.1 -7.4 -2.6 -48.1 1.4 22.4 43.8 31.8 34.1 in € in % Growth Investments Gearing in % 55.8 63.0 72.9 - CFROI 2) in % 14.1 12.9 11.6 11.4 7.3 10.0 12.1 12.9 12.2 12.0 9)

in € mill. 2) 9) 3.02 2.95 3.0 CVA in € mill. 33.2 15.8 -10.9 -17.7 -141.0 -59.5 3.0 28.6 5.9 -1.9

2.66 2.67 15.0 600 5)

7) Stock Exchange Data 2004 2005 2006 Change in % Employees 7,574 7,988 10,374 11,069 11,331 11,478 12,237 12,154 13,327 13,639 7% 2.54 2.54 2.5 542.2 12.9

12.2 500 in € 12.0 12.0 Earnings per share 2.54 2.66 2.95 +11

430.2 5) 2.0 7) Adjusted earnings per share in € 2.54 2.67 3.02 +13 Stock Exchange Data 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 CAGR 97-06

9.7 400 8.9 8.8 9.0 Dividend per share in € 1.07 1.18 1.30 +10 Earnings per share in € 1.43 1.64 1.74 2.86 -0.29 1.31 1.71 2.54 2.66 2.95 8% 1.5 295.8 300 6) 272.1

250.5 Share price at year-end in € 35.15 33.80 45.00 +33 Adjusted earnings per share in € 1.37 1.29 1.40 1.69 0.83 1.57 2.01 2.54 2.67 3.02 9%

6.0 223.8 1.0 200 Shares outstanding (weighted) 6) in 1,000 69,598 73,196 73,309 0 Dividend per share in € 0.42 0.45 0.50 0.80 0.60 0.66 0.77 1.07 1.18 1.30 13% 3.0 0.5 100 Market capitalization at year-end in € mill. 2,607.0 2,506.9 3,337.6 +33 Dividends in € mill. 29.0 31.5 34.7 55.1 38.8 42.7 49.8 78.7 86.4 95.3 14% Equity per share in € 10.6 11.7 12.9 15.7 14.8 15.1 15.2 19.6 20.3 21.7 8% 0.0 0.0 0 2004 2005 2006 2004 2005 2006 2004 2005 2006 Segments 2006 Central-East Central-West North-West Investments Share price at year-end in € 22.03 21.18 21.59 19.13 15.75 16.95 21.18 35.15 33.80 45.00 8% 8) Europe Europe Europe USA and Other 7) in € mill. and % Shares outstanding (weighted) in 1,000 69,455 69,455 69,223 68,823 67,975 64,640 64,645 69,598 73,196 73,309 1% IFRS ROCE WACC Free cash flow Revenues 616.0 (+21%) 469.2 (+22%) 827.5 (+11%) 349.5 (+4%) -37.2 (-60%) Market capitalization at year-end in € mill. 1,530.0 1,471.3 1,499.5 1,328.7 1,093.9 1,106.5 1,382.6 2,607.0 2,506.9 3,337.6 9% Adjusted CFROI Hurdle rate Growth investments EBITDA 1) 158.1 (+16%) 96.1 (+23%) 177.7 (+8%) 63.4 (-5%) -23.4 (-30%)

1) EBIT 103.3 (+19%) 59.1 (+36%) 116.1 (+6%) 48.2 (-7%) -27.1 (-29%) Condensed Balance Sheet 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 CAGR 97-06

CFROI in % 14.6 13.3 11.6 11.2 -54.0 Fixed and financial assets in € mill. 892.6 1,121.4 1,446.8 1,611.3 1,556.3 1,460.9 1,601.9 2,012.7 2,232.1 2,531.6 12% Total investments 133.7 (+9%) 101.0 (+63%) 151.7 (+34%) 142.0 (>100%) 2.0 (+54%) Inventories in € mill. 214.8 223.4 265.4 300.7 331.8 370.2 348.4 391.4 445.9 509.8 10% Revenues by Segment EBITDA by Segment Revenues by Product Capital employed 624.3 (+10%) 453.8 (+15%) 1,058.9 (+11%) 437.6 (+27%) 23.6 (-9%) Other assets in € mill. 507.9 687.8 631.6 624.3 543.8 491.1 598.2 461.8 591.6 632.9 2% (-3%) (+7%) (0%) (+13%) (+12%) 5 5 4 Employees 4,612 2,151 4,213 2,483 180 Balance sheet total in € mill. 1,615.3 2,032.6 2,343.8 2,536.3 2,431.9 2,322.2 2,548.5 2,865.9 3,269.6 3,674.3 10% 4 1 4 3 1 Equity 8) in € mill. 756.9 838.1 921.2 1,109.2 1,008.0 973.1 983.0 1,367.2 1,483.1 1,591.4 9% 1) Adjusted for non-recurring income and expenses 1 Provisions in € mill. 239.5 263.1 311.9 325.6 283.1 310.1 307.0 271.0 273.7 288.1 2% 2) Cash flow from operating activities minus cash flow from investing activities plus growth investments; 3 2 3 2 free cash flow differs from the figures reported in prior years because of a change in the reporting of interest and tax payments Liabilities in € mill. 619.0 931.4 1,110.7 1,101.5 1,140.8 1,039.0 1,258.5 1,227.7 1,512.8 1,794.8 13% 2 3) Average number of employees for the year 4) Equity including minority interest 5) Before amortization of goodwill and excluding non-recurring income and expenses Notes: 7) Adjusted for treasury stock, adjusted for 1:8 stock split (1999) 1) Including non-recurring income and expenses 8) Equity including minority interest 6) Adjusted for treasury stock 1 Central-East Europe 28% 1 Central-East Europe 34% 1 Hollow bricks 37% 2) Adjusted for non-recurring income and expenses 9) Adjusted for the acquisition of Robinson Brick in the USA during 2006, ROCE equals 9.1% 7) Adjusted for the acquisition of Robinson Brick in the USA during 2006, ROCE equals 9.1% and CFROI equals 12.1% 2 Central-West Europe 21% 2 Central-West Europe 20% 2 Facing bricks 36% 3) Operating EBIT : Interest result and EVA totals € 39.0 million, CFROI equals 12.1% and CVA totals € 4.5 million. 8) Including Group eliminations and holding company costs 3 North-West Europe 37% 3 North-West Europe 38% 3 Roofing systems 21% 4) Profit after tax : Equity 5) Average number of employees during the year Note: The above data reflect figures reported in the relevant year; 4 USA 16% 4 USA 13% 4 Pavers 6% Note: in the table of segment data, changes in % to the prior period are shown in brackets. 6) Before amortization of goodwill and excluding non-recurring income and expenses no retroactive adjustments were made for deconsolidated segments 5 Investments and Other -2% 5 Investments and Other -5% All abbreviations and foreign terms are defined in the glossary (bookmark) on page 135. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Ten-Year Review

1,591.4 EBIT in € mill. 257.5 270.3 299.6 +11 Operating EBITDA in € mill. 226.3 231.4 274.5 307.8 221.2 302.6 349.9 405.4 428.4 471.9 9% 428.4

1,954.6 1,500

Revenues EBITDA Equity Capital employed in € mill. 797.6 936.1 1,297.7 1,568.5 1,613.9 1,508.7 1,635.4 2,031.5 2,289.4 2,598.2 14%

in € mill. 2) 9) 3.02 2.95 3.0 CVA in € mill. 33.2 15.8 -10.9 -17.7 -141.0 -59.5 3.0 28.6 5.9 -1.9

2.66 2.67 15.0 600 5)

7) Stock Exchange Data 2004 2005 2006 Change in % Employees 7,574 7,988 10,374 11,069 11,331 11,478 12,237 12,154 13,327 13,639 7% 2.54 2.54 2.5 542.2 12.9

12.2 500 in € 12.0 12.0 Earnings per share 2.54 2.66 2.95 +11

430.2 5) 2.0 7) Adjusted earnings per share in € 2.54 2.67 3.02 +13 Stock Exchange Data 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 CAGR 97-06

9.7 400 8.9 8.8 9.0 Dividend per share in € 1.07 1.18 1.30 +10 Earnings per share in € 1.43 1.64 1.74 2.86 -0.29 1.31 1.71 2.54 2.66 2.95 8% 1.5 295.8 300 6) 272.1

250.5 Share price at year-end in € 35.15 33.80 45.00 +33 Adjusted earnings per share in € 1.37 1.29 1.40 1.69 0.83 1.57 2.01 2.54 2.67 3.02 9%

1) EBIT 103.3 (+19%) 59.1 (+36%) 116.1 (+6%) 48.2 (-7%) -27.1 (-29%) Condensed Balance Sheet 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 CAGR 97-06

Building Value. For a sustainable future.

Mission Statement

As the world’s leading manufacturer of bricks, we regard the economy as an integral part of society. Its duty is to serve people and generate benefits for all. Our goal is to create sustainable values with natural products: a residential environment of lifelong quality and safety for our customers, a sound investment for our shareholders and attractive jobs for our employees.We take our role as a responsible member of society seriously and act in accordance with economic, ecological and social principles – in order to remain successful in the future.

We focus on the areas in which we are among the best in the world – our core products for masonry, roofs and paving. The long history of our company, our strong affiliation with natural products, our employees who act as entrepreneurs and our internationality through individual diversity provide a sound basis for the creation of lasting values.

We believe in people. Bricks by Wienerberger. Designed for living. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 …but not much better . WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 On the one hand: Energy prices rose by € 47 million . At the beginning of the year we were worried about an increase of the same amount. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 On the other hand: EBITDA increased by € 43.5 million to € 471.9 million. We couldn’t predict this, but we saw it coming. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 On the one hand: Sales volumes in the USA fell by 8% . A decline of 13% in US housing starts during the past year is something we really didn’t expect. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 On the other hand: Revenues increased 22% in Central-West Europe. We were absolutely right to expand our business in Germany just in time. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 On the one hand: Return on capital employed declined to 8.8%. Even if it’s only marginal, this decrease of 0.1 percentage point is something we had to digest. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 On the other hand: € 430 million in growth investments But let’s take an optimistic view of the future. That’s why we expanded our market positions and created the potential for tomorrow. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 On the one hand , we are only Nr. 2 in clay roof tiles in Europe. Actually, that’s not too bad. Except for us. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 On the other hand , Wienerberger remains the Nr.1 in bricks worldwide. And we won’t accept anything less. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Contents

14 Chief Executive’s Review18 Corporate Governance 37 The Company 56 Review of Operations 18 The Wienerberger 37 Strategy and 56 Highlights 2006 Track Record Business Model 58 The Economy 20 Managing Board 40 Key Factors and 60 Financial Review and Management Major Drivers for the Brick Business 70 Procurement 22 Organization 42 Risk Management 71 Outlook and Goals 23 Report of the Supervisory Board 44 Products

26 Members and Committees 46 Research and Development of the Supervisory Board 48 Brick Production 27 Corporate Governance 50 Corporate Responsibility Report 52 Corporate Responsibility 30 Remuneration Report Projects 2006 33 The Wienerberger Share 54 Employees

Index

Auditor 23, 25, 27-29, 43, 131 Development of costs 15, 70, 103-107 Liabilities 63-66, 117-120 Risk 29, 42-43, 71, 120-123 Balance sheet 63-66, 88, 90-91, Development of results 14-17, 60-63, Managing Board 14-17, 20-21, 30-32 Share 15, 25, 29, 31-36, 63, 108, 113 99-103, 110-118 68-69, 86, 92-93, 103-108 Market positions 22, 37-39, 72-73 Shareholder structure 34-35 Bond 16, 35, 38, 66, 119, 123 Dividend 15, 34, 39, 108, 132 Outlook 17, 71 Stock options 31, 54, 124-126 Business segments 22, 37-39, Employees 54, 104-105, 124-126 Products 37, 44-49 Strategy 16-17, 37-38, 68-69, 71 72-84, 92-93 Equity 64-66, 89, 112-113 Profitability 37-40, 60-63, 68-69 Structure 22, 72-73, 127-130 Corporate governance 25, 27-32 Free cash flow 37, 66-67, 87, 109-110 Rating 38, 66 Supervisory Board 23-32, 104 Currencies 42, 60-61, 64, 66, 98-99, Investments & acquisitions 16, 62-68, Remuneration 30-32 Sustainability 50-53, 54-55 102, 119-122 71, 90-91, 94-97, 109-110 Research & development 46-47 Value management 68-69 Investor relations 35-36, 136

12 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Financial Statements Service

72 Segments 85 Financial Statements 134 Service 72 Plant Sites and 85 Contents 94 Notes to the 134 Addresses of Market Positions Financial Statements Major Companies 86 Income Statement 74 Central-East Europe 94 General Information 135 Glossary 87 Cash Flow Statement 78 Central-West Europe 103 Notes to the 136 Financial Calendar 88 Balance Sheet Income Statement 80 North-West Europe Ten-Year Review 89 Changes in 109 Notes to the 82 USA Equity Statement Order Card Cash Flow Statement 84 Investments and Other 90 Table of Fixed 110 Notes to the and Financial Assets Balance Sheet 92 Segment Reporting 118 Financial Instruments

120 Risk Report

123 Other Information

127 Group Companies

131 Unqualified Opinion of the Auditor

132 Financial Statements of Wienerberger AG

Internet Links

The terms that are designated as links (see example below) in this annual report provide access tations due to the long wint to additional background infor- enerberger share started 200 mation together with the URL 81 by April In May the sha annualreport.wienerberger.com annualreport.wienerberger.com/share (without space between words).

13 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 CHIEF EXECUTIVE’S REVIEW

Dear Shareholders,

On the one hand Wienerberger met all its growth and earnings targets for 2006 in full. However, the year a difficult first half, brought us a wide range of different developments. On the one hand, we were confronted with on the other hand a strong finish at year-end adverse weather, start-up costs for a number of new plants and higher energy prices during the first half of the year. On the other hand, we were able to use the stronger demand in Europe to increase sales volumes and make necessary price adjustments, and the unusually mild weather at the end of the year made it possible for construction to remain strong during the fourth quarter.We were able to partly offset the slump in US housing starts with the acquisition of Robinson Brick in June, and again demonstrate the success of our growth strategy.

Clear improvement of The economic climate was significantly better throughout 2006 than in the year before. business climate in Although construction activity was slowed by the long winter in large parts of Europe at the start Europe, but slump in US residential construction of the year, Wienerberger profited from strong demand beginning in May – especially in Poland, Romania, Switzerland, Belgium and France. I would also like to highlight the recovery in new residential construction on the German market after roughly ten years of declines and stagnation, which I attribute chiefly to a general improvement in consumer confidence but also to advance purchases prior to the VAT increase in 2007 and the final elimination of the homebuilders’ allowance. We were positively surprised by the steady and strong level of residential construction in Hungary, where the introduction of a tax on interest income apparently served as a stimulus for higher investments in real estate. In Great Britain Wienerberger benefited from the fact that our products are used primarily in the more stable new construction segment, since the renovation market declined during the year. However, the development of new residential construction in the USA was significantly worse than expected: housing starts followed a strong first quarter with a decrease of 13% year-on-year and up to -30% on a monthly basis.

Strong top-line Supported by the growth projects completed in past years and sound demand in Europe, the growth leads to 10% Wienerberger Managing Board decided to confirm its ambitious goal to increase earnings by 10%, plus in EBITDA even after the difficult first six months – and we met this goal in full. Group revenues rose by 14% to € 2,225.0 million, operating EBITDA by 10% to € 471.9 million and operating EBIT by 11% to € 299.6 million. Results for the first quarter were negatively affected by bad weather and the second quarter was slowed by higher energy costs, but the third and fourth quarters brought clear two- digit growth rates. This improvement resulted above all from the previously implemented price increases and strong construction activity throughout major parts of Europe. The 14% growth in revenues was comprised of a 10% plus in sales volumes and average price increases of 4%.

Solid growth in revenues It is a clear confirmation of our growth strategy and the strength of our geographic portfolio and earnings in Europe, that we were able to more than offset the earnings decline on our single largest market, the USA, slight declines in the USA as well as higher energy prices of € 47 million with higher earnings, especially in Germany, Belgium, France, Great Britain, Poland, Romania and Hungary.The Central-East and Central-West Europe segments recorded the largest increases with EBITDA growth of 16% to € 158.1 million and 23% to € 96.1 million, respectively. The North-West Europe segment, which has served as a growth driver in recent years, recorded a plus of 8% in EBITDA to € 177.7 million. The USA registered a decline of 5% to € 63.4 million in spite of the positive effects from the initial

14 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Wolfgang Reithofer Chief Executive Officer of Wienerberger AG

consolidation of Robinson Brick and capacity adjustments at mid-year. Non-recurring expenses of € 7.1 million were incurred for plant shutdowns in the USA and Czech Republic, but these costs were nearly offset by the sale of non-operating property in the south of Vienna for € 5.1 million.

Earnings per share also rose by 11% to € 2.95 for the reporting year – and we want you, our Increase in dividend shareholders, to benefit directly from this development. Wienerberger intends to continue its and continuation of payout policy previous dividend policy, which calls for a payout ratio of roughly 45%. The Managing Board will therefore recommend that the Annual General Meeting on May 10 approve an increase in the dividend from € 1.18 to 1.30 per share, which represents a yield of 3.4% on the average share price for 2006. We also plan to distribute roughly 45% of net profit in the future in order to offer shareholders an attractive minimum return on their invested capital.

Wienerberger carried out a share buyback from July 10 to July 21, 2006 and purchased Share buyback to serve 250,000 shares, or 0.34% of the shares outstanding, at an average price of € 35.53 on the Vienna stock option plans Stock Exchange. These shares will be used to service the stock option plans. In total, Wienerberger has invested € 8.9 million in this program. Details on the stock option plan are provided on page 124 of the notes to the financial statements.

The sustainable success of Wienerberger is based on innovative product development, compe- Strong market positions, tent sales partners and cost leadership in our industry as well as strong positions on all local markets geographical diversification and product development and a balanced geographic portfolio. This allows us to offset fluctuations on individual markets and as basis for successful minimize risk. The largest share of revenues is generated in the USA with 16%, followed by business model Germany with 14%, Belgium with 10% and the Netherlands with 9%. Wienerberger is the largest producer of hollow bricks in the world, and the company that drives the development of this product. We are also number 1 in facing bricks in Europe and became the co-leader on this market in the USA during 2006. In the clay roof tile segment, I consider Wienerberger to be the number 2 in Europe. We are currently working on a program to coordinate our marketing activities throughout the Group and will concentrate on the optimization of our marketing mix with respect to product development, distribution and branding.

15 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Fastest growing company Wienerberger is the largest and fastest growing company in the brick industry, and this gives in the brick industry with us unique access to profitable expansion projects. After realizing the synergies and opportunities profitable expansion projects for optimization that we expect from every project, our goal is to generate a cash flow return on investment (CFROI) that lies clearly above the current return for the Group. Our activities in the past prove that we are able to meet this goal. CFROI for the Group declined slightly from 12.2% in 2005 to 12.0% for 2006 due to the high pace of investment activity over the past two years. The acquisition of Robinson Brick in June 2006 had a negative impact on our CFROI because capital employed was increased by the full purchase price of € 95.5 million, but we were only able to consolidate six months of earnings. In addition, the focus of our bolt-on projects is shifting toward the construction of new plants and extension of capacity, which leads to longer start-up and optimization phases and has a negative impact on earnings in the initial years.

€ 430 million invested Wienerberger invested a total of € 530 million in 2006, whereby € 430 million was directed in growth, gearing rises to growth projects and € 100 million to maintenance capex (maintenance and the optimization of to 73% production facilities). The growth investments include 53% of acquisitions and takeovers in the form of asset deals as well as 47% of new plant construction and capacity expansion. During the past year we carried out roughly 50 bolt-on projects. They were financed primarily through free cash flow, with debt used to cover any additional requirements. As a result of these growth projects, net debt rose from € 934.4 to 1,159.8 million and gearing from 63.0 to 72.9%. Wienerberger generates sufficient free cash flow to invest € 250 to 300 million in growth each year. At the end of 2006 we did not have enough flexibility to finance additional expansion steps – such as our intended takeover of Baggeridge Brick PLC in Great Britain, which is currently awaiting a decision by the competition authorities – and still maintain our current BBB and Baa2 ratings.

Successful placement of This situation led us to issue our first hybrid bond, which was successfully placed during first hybrid bond February 2007. The instrument not only strengthened our capital base, but also created additional strengthens capital structure without diluting financial flexibility for our continued growth. This hybrid bond is classified as 100% equity under shareholders IFRS, while the rating agencies gave it a 50% equity credit. As a result of the strong demand – the issue was oversubscribed nearly 11-times – we increased the volume from the originally planned € 400 to 500 million. The bond was placed with Austrian (16%) and international investors (84%), primarily in Great Britain, Germany, the Benelux countries, Switzerland and France. The Wiener- berger hybrid bond has a perpetual maturity and a fixed coupon of 6.5% for the first ten years, and will convert to a variable interest rate based on the 3-month EURIBOR plus 3.25% after this time. This security represents a cost-effective replacement for existing debt and, at the same time, will reinforce our capital structure and rating without diluting shareholders.

Optimistic outlook for For 2007 we expect continued growth in Central-East Europe and strong demand for bricks, Europe, further decline especially in Poland, Romania and Bulgaria. In Russia Wienerberger has started to construct a second expected in US housing starts plant 800 km east of Moscow, and our first plant near this city entered the start-up phase last October.We also anticipate favorable development in Western Europe, with further growth on the residential construction markets in Belgium and France as well as an improvement over the current moderate level in the Netherlands and Great Britain. The recent optimistic sentiment in Germany leads to expectations of at least stable development, and in Switzerland construction activity should remain sound. A slight decline is only forecasted in Italy. In the USA we do not see any signs of

16 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Financial Statements Service

recovery in new residential construction before the second half of 2007. The current high stock of unsold houses must first return to a reasonable level of under six months before this situation can improve. We intend to use the continued optimization of our plants as well as the full-year consolidation of Robinson Brick to also generate earnings growth in the USA during 2007.

We accelerated our growth course in 2006 and thereby created a sound base for the future Goal for above-average development of earnings. On the one hand, we expect 2007 will bring roughly € 30 million of increase in earnings confirmed higher costs from rising energy prices and a further market decline in the USA but, on the other hand, our forecasts call for a favorable business climate in Europe. I am therefore confident that we will again be able to meet our goal to outperform the growth in the building materials sector with an increase of approximately 10% in earnings during 2007. Our expansion plans include bolt-on investments of roughly € 250 million. From the current point of view, most of this volume will be directed to the construction of new plants and extension of capacity.Approximately € 130 million will be added to this amount if the UK Competition Commission approves the acquisition of Baggeridge Brick.

The success of our Company is based on a strong corporate culture and goal-oriented team- Thanks to employees and work by all parties. The success of our operating companies is the result of sustainable actions in management, Supervisory Board and shareholders all areas by employees as well as managers. This commitment is also honored by our customers and business partners. I would like to thank the Supervisory Board for their productive discussions and efficient handling of all issues, and my colleagues on the board for their intensive and constructive teamwork in 2006. I would also like to thank Hans Tschuden for the valuable contributions he has made during his 18 years of service within the Wienerberger Group, and wish him a great deal of success in his new function. My special thanks go out to our employees and managers, whose commitment again allowed us to record excellent results. In conclusion, I would like to express my thanks to you, our shareholders, for the trust you have placed in us. Continue to accompany us on our growth course in a successful future.

17 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 CORPORATE GOVERNANCE

The Wienerberger Track Record

Revenue declines in 1994, 2001 and 2004 are due to the sale or deconsolidation of Group companies.

1989 1996 Founding of the Pipelife joint-venture (plastic pipes), investment in Treibacher Acquisition Chemische Werke (metallurgy and abrasives) and the ÖAG Group (sanitary ware wholesaler), of Terca, expansion of clay pipe activities the leading facing brick producer in Benelux, majority investment in Semmelrock (pavers) in Austria

1819 Founding by Alois Miesbach 1990 on the Wienerberg in Vienna Start of Expansion 1869 Start of public trading on the expansion Vienna Stock Exchange nach Osteuropain Eastern Europe 1,094.5 1918 Loss of plants in Croatia, through market entry in Hungary Hungary and Czechoslovakia in the wake of World War I 880.8 934.2 1945 Hundreds of dead and destruction of plants on the Wienerberg 851.1 in aerial attacks 766.9 1955 Record production for the 765.1 reconstruction of Vienna after 672.7 World War II 1994 1972 Investment in Bramac concrete Sale of the roof tile company in Austria ÖAG

1980 Beginning of reorganization Group and turnaround by new management 340.5 under Erhard Schaschl 1995 236.9* Group revenues in € mill. Acquisition of the 179.8* 154.6* Sturm Group in France

1986 Start of internationalizationInternationalisierung * 1986 to 1988 and expansion through acquisition non-consolidated of the Oltmanns Group in Germany revenues of Wienerberger AG WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance Track Record The Company Review of Operations Segments Financial Statements Service

2001 New Managing Board under Wolfgang Reithofer, 2,225.0 acquisition of Optiroc brick division in Northern Europe, implementation of a Group-wide 1997 Introduction of Wienerberger restructuring Value Management and focus on program core business, with focus on Germany sale of the Business Park Vienna real estate 1,954.6 project and Treibacher Abrasives 1,826.9

2006 1,758.8 Acquisition of 1,670.3 1,653.7 Robinson Brick in the western region of the USA and announcement of a recommended cash offer to acquire Baggeridge Brick in Great Britain 1,544.9

1,337.5 2005 Debut bond 2000 with a volume Transformation to of € 400 million issued 1,143.3 pure 1,113.7 player in building materials through 2004 sale of Treibacher Transformation to a pure free float company, Industries and full acquisition of Koramic Roofing and Wipark garage business, acquisition thebrickbusiness of Cherokee Sanford in Great Britain in the USA

1999 Advance to Global Player through the acquisition of 2003 General Development of a second core business Shale in the USA, purchase of roofing systems ZZ Wancor in Switzerland, through acquisition of a 50% stake in Koramic Roofing and acquisition of Mabo and advance to Number 2 in clay roof tiles in Europe, in Scandinavia by Pipelife sale of Steinzeug clay pipe activities

2002 Acquisition of Hanson PLC brick activities in Continental Europe WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Managing Board and Management

Wolfgang Reithofer Chief Executive Officer While working toward his Doctorate of Laws at the University of Vienna, he also attended courses Appointed up to May 2011 in technical mathematics and business administration. After nine years as assistant to the board and Born 1948, married, one daughter, two sons officer of Union Baugesellschaft and Österreichische Realitäten AG, he joined Wienerberger as an officer in 1981 with responsibility for personnel, legal affairs, controlling, and accounting. After only four years he was appointed to the Managing Board in 1985; he became Vice-Chairman in 1992 and CEO in May 2001. Additional functions: Chairman of the Supervisory Board of ÖBB Holding AG and ÖBB Immobilien Management GmbH, Vice-Chairman of the Supervisory Board of Immoeast AG, Member of the Supervisory Board of Wiener Börse AG

Heimo Scheuch Chief Operating Officer After the completion of legal studies at the Universities of Vienna and Paris and studies at the Appointed up to May 2009 Vienna University of Economics and Business Administration, the City of London Polytechnic and Born 1966, married Ecole Superieure de Commerce de Paris, he began his career with the legal firm Shook, Hardy & Bacon in Milan and London as a corporate finance specialist. In 1996 he joined Wienerberger AG as assistant to the Managing Board; in 1997 he moved to the senior management of Terca Bricks in Belgium, where he became CEO in 1999. In May 2001 he was appointed to the Managing Board of Wienerberger AG as COO. Additional functions: Member of the Executive Committee of the European Brick Association, board member of the French and Belgian brick associations

Hans Tschuden Chief Financial Officer He completed studies at the Vienna University of Economics and Business Administration and Up to March 2007 INSEAD in Paris, and started his career – after working in the accounting department of Ögussa and as Born 1958, married, two sons assistant to the Managing Director of Heringrad – with the Wienerberger Group in 1989 as controller. He then advanced to become Managing Director of Keramo Wienerberger in Belgium, Wienerberger pipe systems in Vienna and Steinzeug clay pipe sewage systems in Cologne. In 1999 he became a member of the Wienerberger Management Committee and served as CFO of Wienerberger AG from May 2001 to March 2007.

Willy Van Riet Chief Financial Officer After receiving his Master Degree in Business Economics from the University of Ghent, he started Appointed up to April 2010 his career as an auditor and subsequently senior manager with Price Waterhouse Coopers in Belgium. Born 1957, married, one daughter, one son He was active in the building materials sector beginning in 1993, first as Chief Financial Officer of Terca and later Koramic Building Products (also as a member of the Wienerberger Supervisory Board). In 2004 he joined the Wienerberger Management Committee and took over the management of Wienerberger Limited in Great Britain. On April 1, 2007 he will replace Hans Tschuden as CFO of Wienerberger AG.

Johann Windisch Chief Operating Officer After receiving his doctorate in Industrial Engineering and Management from the Technical Appointed up to May 2009 University of Vienna and consulting work for Agiplan in Vienna, he joined Wienerberger in 1980 as Born 1952, married, one daughter, one son assistant to the Managing Board. He assumed management of the controlling and accounting departments in 1983, and took over direction of the building construction area in 1987. He was then appointed to the Managing Board of Wienerberger Ziegelindustrie, where he became CEO in 1999. In May 2001 he was elected to the Managing Board of Wienerberger AG as COO. Additional functions: Chairman of the Hollow Brick Product Group and member of the Executive Committee

20 of the European Brick Association, President of the Austrian Association of Brick Producers WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 From left to right: Johann Windisch, Heimo Scheuch, Wolfgang Reithofer, Hans Tschuden, Willy Van Riet

Management Committee The Management Committee supports the Managing Board in the strategic and organizational development of the Wienerberger Group. It comprises the Top Executives (regional managers) as well as the Heads of Development Centers and Corporate Services.

Heads of Corporate Services Top Executives Sonja Eitler Human Resources Christof Domenig France, Iberian Peninsula, North Africa Stefan Huber Group Treasury Dick Green USA Gerhard Koch European Lobbying Helmut Haslauer Eastern Europe (South), Italy Thomas Melzer Corporate Communications Robert Holzer Semmelrock concrete pavers Gernot Schöbitz International Procurement Klaus Hoppe Germany, Scandinavia Johann Schübl Corporate IT Bert Jan Koekoek Netherlands, Great Britain Brigitta Schwarzer General Secretary Christian Schügerl Eastern Europe (North), Switzerland, Austria, Hannes Taubinger Corporate Controlling Finland Karl Thaller Eastern Europe (East), Russia Johan Van Der Biest Belgium Heads of Development Centers Stefan Claeys Product Groups Facade and Roof Walter Linke Corporate Engineering Martin Kasa Product Group Wall Corporate Marketing Anton Ulmer Corporate Development

21 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Organization as of April 1, 2007

Wolfgang Reithofer Johann Windisch Heimo Scheuch Willy Van Riet CEO COO COO CFO

Corporate Services Corporate Communications International Procurement European Lobbying Corporate Controlling - Investor Relations Corporate IT General Secretary Group Treasury - Legal Management Risk Management Human Resources

Development Centers Corporate Development Corporate Engineering Corporate Marketing - Strategy Product Group Wall Product Group Facade Product Group Roof

Segments Investments Investments and Other Central-East Europe North-West Europe and Other Real Estate Austria Belgium Pipelife Poland Netherlands Czech Republic France Hungary Great Britain Slovakia Ireland Slovenia Denmark Croatia Sweden Bosnia Norway Romania Bulgaria Russia Ukraine Finland Baltic States Semmelrock Bramac Tondach Gleinstätten

Central-West Europe Central-West Europe Italy Germany Switzerland

USA

22 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance Organization Report of the Supervisory Board The Company Review of Operations Segments Financial Statements Report of the Service Supervisory Board

During the reporting year the Supervisory Board and Managing Board held six meetings that Extensive coordination included extensive discussions on the financial position and strategic development of the Group as between Supervisory and Managing Boards well as major events, investments and programs. At all meetings the Managing Board provided the Supervisory Board with detailed information and also supplied regular written reports on the business and financial condition of the Group and its holdings, as well as the personnel situation, capital expenditure and acquisition plans. Separate reports were prepared for special projects. In addition, the Chairman of the Supervisory Board held regular conferences with the Chairman of the Managing Board to discuss the strategy, development of business and risk management of the Company.

The activities of the Supervisory Board included a detailed evaluation of the Group’s long-term Evaluation of long-term growth potential and the implementation of its profitable expansion strategy. Larger acquisition growth potential and energy strategy by Supervisory projects were also discussed, but not concluded because of excessive price expectations by the Board sellers. The Supervisory Board approved the issue of a hybrid bond, which will be used to finance the roughly 50 bolt-on projects that were carried out during 2006, and strengthen the capital base of the Group. This bond was successfully placed in February 2007 with a volume of € 500 million. In a meeting on September 5 the Supervisory Board held an extensive discussion on the energy strategy of the Group together with the Managing Board and approved the hedging policy recommended by the Managing Board, in particular for the procurement of natural gas and electricity.

The committees examined a range of specialized subjects in detail and reported to the Super- In-depth treatment of visory Board on the results of these discussions. The Project Committee and the Personnel and individual topics by the committees Nominating Committee each met four times, and the Audit Committee met once. The Presidium of the Supervisory Board received regular information from the Managing Board on the development of business and represented the Company on Managing Board issues. In particular, the Presidium was responsible for approving the remuneration for the individual members of the Managing Board, including the variable components of compensation. The criteria used to determine the variable components of compensation, the principles underlying pension commitments and severance pay as well as information on compensation paid to individual members of the Managing and Supervisory Boards are explained in the remuneration report on page 30. There were two persons who each missed one meeting of the Supervisory Board during the past year, and two committee members who each missed one meeting.

The Audit Committee consulted the auditor in its meeting on March 27, 2006, which focused Audit Committee on an examination of the 2005 annual financial statements of Wienerberger AG, the consolidated examined annual financial statements and financial statements, the review of operations and the recommendation of the Managing Board for risk management the distribution of profits. In addition, the Audit Committee issued a statement on the planned auditor for the 2006 Business Year that also covered the legal relations of this firm with the Wiener- berger Group and members of its corporate bodies, negotiated the fee for the audit of the annual financial statements and prepared a recommendation for the auditor’s election. The Audit Committee also discussed the implementation of risk management in the Group and found no grounds for criticism.

23 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Friedrich Kadrnoska Chairman of the Supervisory Board of Wienerberger AG

Fink and Rasinger A meeting of the Personnel and Nominating Committee on February 14, 2006 discussed the nominated for election proposal of nominations to the Annual General Meeting, which were prepared with the assistance to Supervisory Board of two external consultants. This led to the nomination of Karl Fink, member of the Managing Board of the Vienna Insurance Group, and Wilhelm Rasinger, Managing Partner of Intermanage- ment-Unternehmensberatung and Chairman of IVA-Interessensverband für Anleger. The Annual General Meeting on April 27 followed this recommendation and elected Karl Fink and Wilhelm Rasinger to the Supervisory Board, and also extended the terms of office for Friedrich Kadrnoska and Harald Nograsek. Following his election to the Supervisory Board, Karl Fink was appointed to the Personnel and Nominating Committee and Wilhelm Rasinger was appointed to the Audit Committee. The Personnel and Nominating Committee also focused on the design of the 2006 and 2007 stock option plans for key managers of the Wienerberger Group. The terms of the 2006 plan are described on page 124 of the notes and information on the 2007 plan can be found on the Wienerberger website.

Supervisory Board appoints The Supervisory Board followed a recommendation of the Personnel and Nominating Willy Van Riet as new Committee and, in a meeting on December 6, appointed Willy Van Riet to become the new Chief Wienerberger CFO from April 2007 Financial Officer of Wienerberger AG as of April 1, 2007. He will succeed Hans Tschuden, who is leaving Wienerberger on March 31, 2007 to become the CFO of Telekom Austria AG. Willy Van Riet, the former Managing Director of Wienerberger activities in Great Britain, was chosen because of his branch experience and many years of financial and capital market expertise from a number of internal and external candidates in a multi-phase selection process that also involved an external consultant. He will receive a three-year contract that extends to April 2010 and, as Chief Financial

24 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance Report of the Supervisory Board The Company Review of Operations Segments Financial Statements Service

Officer, will be responsible for controlling, treasury, IT and risk management as well as the Pipelife joint venture. Human resources and corporate development will again become part of the duties of CEO Wolfgang Reithofer.The Supervisory Board would like to thank Hans Tschuden for his 18 successful years with the Wienerberger Group and wish him all the best for the future.

On February 14, 2006 the Supervisory Board amended the rules of procedure for the Measures implemented to Managing and Supervisory Boards to meet new legal requirements and the revised Austrian further optimize corporate governance Corporate Governance Code. The former Strategy Committee is now called the Project Committee, and the name of the Accounting Committee was changed to the Audit Committee. The responsibilities of the various committees of the Supervisory Board are described in detail in the corporate governance report on page 27. The members of the committees are listed on page 26, and the criteria for independence that were established by the Supervisory Board can be reviewed on the Wienerberger website. All members of the Supervisory Board have confirmed their independence in accordance with these criteria. In a meeting on March 27, 2006 the Supervisory Board changed the allocation of duties among the members of the Managing Board, and transferred the responsibility for the Group’s activities in the USA to Johann Windisch and activities in Germany to Heimo Scheuch. A new remuneration system for the Supervisory Board was also presented, which better meets the requirements of good corporate governance. This system was approved by the Annual General Meeting on April 27, 2006 and is described in the remuneration report on page 30.

The annual financial statements and review of operations of Wienerberger AG as well as the Unqualified opinion and consolidated financial statements for 2006 according to IFRS were audited by KPMG Austria approval of annual financial statements GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft and awarded an unqualified opinion. The Audit Committee discussed all documentation related to the annual financial statements, the recommendation of the Managing Board for the distribution of profits and the auditor’s reports in detail with the auditor and presented this information to the Supervisory Board. We examined this information as required by § 96 of the Austrian Stock Corporation Act and agree with the results of the audit. The Supervisory Board has approved the annual financial statements, which are hereby ratified in accordance with § 125 Par. 2 of the Austrian Stock Corporation Act. We also agree with the recommendation of the Managing Board for the use of net profit.

Franz Lauer, who has been a member of the Supervisory Board since 1983, and Rupert Lauer and Hatschek Hatschek, who joined this body in 1993, announced their resignations for personal reasons resigned with 137th AGM effective with the 137th Annual General Meeting on April 27, 2006. We would like to thank both these men for their many years of service and valuable contribution to the successful development of the Wienerberger Group.

The Supervisory Board would like to express its thanks to the management and employees of Thanks to employees the Group for their efforts and excellent performance during the past year.The Supervisory Board and management considers the fulfillment of corporate goals and the 11% growth in earnings per share to be a strong achievement.

Vienna, March 26, 2007 Friedrich Kadrnoska, Chairman

25 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Members and Committees of the Supervisory Board

8 shareholder representatives Friedrich Kadrnoska independent, appointed to 142nd AGM (2011), first elected: May 8, 2002 Chairman Chairman of the Supervisory Boards of Österreichisches Verkehrsbüro AG, Ruefa Reisen AG and Adria Bank AG, member of the Supervisory Boards of Wiener Börse AG (Vice-Chairman), Visa Service Kreditkarten AG, Wiener Privatbank Immobilieninvest AG and Conwert Immobilien Invest AG, Managing Board member of Privatstiftung zur Verwaltung von Anteilsrechten, Director of the Visa Europe Limited Board and of UniCredito Italiano Christian Dumolin independent, appointed to 141st AGM (2010), first elected: July 17, 1996 Vice-Chairman Chairman of the Supervisory Board of Koramic Investment Group NV, member of the Board of Regents of the Belgian National Bank Karl Fink independent, appointed to 142nd AGM (2011), first elected: April 27, 2006 Deputy CEO and member of the Managing Board of Vienna Insurance Group, member of the Supervisory Board of Austria Technologie & Systemtechnik AG (AT&S) Peter Johnson independent, appointed to 141st AGM (2010), first elected: May 12, 2005 Chief Executive Officer of George Wimpey PLC and member of the Managing Board of the Home Builders Federation (both up to June 30, 2006), member of the Supervisory Board of DS Smith PLC, Chairman of the Supervisory Board of DS Smith PLC (from January 1, 2007) Harald Nograsek independent, appointed to 142nd AGM (2011), first elected: May 8, 2002 Chief Financial Officer of Österreichisches Verkehrsbüro AG (up to April 30, 2007), Chief Executive Officer of Österreichisches Verkehrsbüro AG (as of May 1, 2007) Claus Raidl independent, appointed to 140th AGM (2009), first elected: May 11, 2004 Chief Executive Officer of Böhler-Uddeholm AG, Chairman of the Supervisory Board of EK Mittelstandsfinanzierungs AG, member of the Supervisory Boards of Wiener Börse AG, Donau Allgemeine Versicherungs-Aktiengesellschaft and Voestalpine Bahnsysteme GmbH Wilhelm Rasinger independent, appointed to 142nd AGM (2011), first elected: April 27, 2006 Managing partner of Intermanagement-Unternehmensberatung, Chairman of IVA-Interessenverband für Anleger, member of the Supervisory Boards of Erste Bank der österreichischen Sparkassen AG and CEE Immobilien Development AG Franz Rauch independent, appointed to 140th AGM (2009), first elected: May 11, 2004 Managing partner of Rauch Fruchtsäfte Gesellschaft mbH, member of the Supervisory Boards of ÖBB Holding AG, Bank Austria Creditanstalt AG, Generali Holding AG, OTAG Oberflächentechnologie AG, Vorarlberger Kraftwerke AG and Vorarlberger Illwerke AG

4 employee representatives Rupert Bellina delegated for the first time: January 25, 2005 Foreman at Semmelrock Baustoffindustrie GmbH Claudia Krenn delegated for the first time: July 2, 2002 Facility management at Wienerberger AG Karl Sauer delegated for the first time: October 9, 1996 Chairman of the Employees’ Council, speaker of the European Employees’ Council Gerhard Seban delegated for the first time: February 3, 2006 Salesman at the Hennersdorf plant in Austria

4 committees Presidium and Remuneration Committee Friedrich Kadrnoska (Chairman), Christian Dumolin Project Committee Friedrich Kadrnoska (Chairman), Christian Dumolin, Peter Johnson, Claus Raidl, Karl Sauer Audit Committee Harald Nograsek (Chairman), Wilhelm Rasinger, Karl Sauer Personnel and Nominating Committee Friedrich Kadrnoska (Chairman), Christian Dumolin, Karl Fink, Franz Rauch, Karl Sauer

Resigned Rupert Hatschek as of April 27, 2006 Franz Lauer as of April 27, 2006

26 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance Members and Comittees of the Supervisory Board Corporate Governance Report The Company Review of Operations Segments Financial Statements Service Corporate Governance Report

For many years Wienerberger has followed a strategy that is designed to increase the value of Implementation of the Company on a sustainable and long-term basis. Strict principles of good management and trans- strict principles of good management and parency as well as the continuous development of an efficient control system form the basis for transparency meeting this goal. This corporate culture creates trust in the company, and is therefore an essential factor for the long-term creation of value.

We give the highest priority to the equal treatment of and provision of comprehensive Guidelines to prevent information to all shareholders. To prevent insider trading, we have issued a compliance code that insider trading implements the provisions of the Issuer Compliance Code published by the Austrian Financial Market Authority, and also covers the members of the Supervisory Board. The observance of these regulations is monitored regularly by our compliance officer.

The revised Austrian Corporate Governance Code was published in January 2006, and reflects Further development changes made to comply with EU recommendations as well as amendments to Austrian company of Austrian Corporate Governance Code law made in 2005. These code revisions further increase transparency and also strengthen the independence of supervisory boards. The new guidelines require the Supervisory Board and its committees to have a sufficient number of independent members. In addition, the annual report must indicate which members of the supervisory board are considered to be independent (also see page 26). Criteria are provided for the independence of the supervisory board members, and the activities of the supervisory board through its committees (nominating and remuneration committee) were adjusted to reflect international norms. Furthermore, compensation paid to the managing board will become more transparent as a result of the disclosure of the principles underlying the remuneration system and the amounts paid to individual board members. The code exceeds legal requirements, and compliance is voluntary. Observance of the code also means that the failure to meet C-Rules (“comply or explain”) must be explained and disclosed.

Wienerberger implemented most of the above-mentioned changes three years ago as part of Support for code and an improvement to its corporate governance system. The renewed declaration of support by far-reaching transparency Wienerberger to the new Austrian Corporate Governance Code and to compliance with its rules was therefore only a formality.We not only want to meet the minimum requirements of this code, but strive to achieve best practice. Wienerberger has already received several awards for its leading role in corporate governance in Austria.

The implementation and correctness of our public announcements were evaluated by KPMG Evaluation and confir- Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft in accordance with the mation of compliance with code by KPMG standards issued by the International Federation of Accountants for reviews, and their report can and Wolf Theiss be reviewed on our website. The auditor’s evaluation of our adherence to the rules of the code and the correctness of our announcements confirmed that this public declaration of compliance is correct. Compliance with the provisions of the code that relate to the auditor was evaluated by Wolf Theiss attorneys-at-law. The resulting report indicated no objections, and is also available for review on our website.

27 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Rules of procedure reflect In keeping with the spirit of the code, the members of the Managing Board and Supervisory provisions of code Board, in particular through their chairmen, regularly confer on the development and strategy of the Company above and beyond discussions conducted during the regular meetings of the Super- visory Board. The Supervisory Board also exercises its consultative and control functions through committees, where such actions are required by defined responsibilities or the content of a particular issue. The rules of procedure for the Managing Board and Supervisory Board were amended to meet the revised requirements of the code in a meeting of the Supervisory Board on February 14, 2006. This also led to a change in the names of the Strategy Committee and Accounting Committee to Project Committee and Audit Committee, respectively, while the responsibilities and duties of these committees remain nearly unchanged. The rules of procedure for the Supervisory Board are published on our website.

Committees, duties and The Supervisory Board is responsible for decisions that involve subjects of fundamental responsibilities of importance or the strategic direction of the Group. The Presidium represents the interests of the Supervisory Board company on all Managing Board issues, and also serves as a Remuneration Committee for the members of the Managing Board. The Project Committee is authorized to approve transactions and measures that do not require the approval of the Supervisory Board – in particular capital expen- ditures, acquisitions and the sale of property – and also makes decisions in urgent cases. The Audit Committee is responsible for all questions related to the annual financial statements and the audit of the Group as well as accounting, in preparation for the Supervisory Board. In addition, this committee evaluates the independence of the auditor and its quality as verified by a peer review. A financial expert serves as a member of the Wienerberger Audit Committee.

All members of Wienerberger The Personnel and Nominating Committee is responsible for preparing nominations to the Supervisory Board are Supervisory Board, whereby its goal is to guarantee the independence of the members of this body. independent; employee participation is part of It recommends nominations to the Supervisory Board, which are placed before the Annual General Austrian system Meeting for a vote. The criteria for independence are published on our website. All shareholder representatives on the Supervisory Board reconfirmed their independence according to these criteria in a meeting on February 14, 2007. The Personnel and Nominating Committee is also responsible for establishing a description of the required qualifications prior to the appointment of persons to the Managing Board and preparing decisions for the Supervisory Board based on a defined selection procedure and succession planning. This committee also approves the terms of the stock option plans for key employees of the Group. The terms of the stock option plan for 2006 are described on page 124 of the notes, while detailed information on previous plans can be found on our website. The participation of Wienerberger employees on the Supervisory Board and its committees through their elected representatives forms a legally regulated part of the Austrian corporate governance system. The Austrian Stock Corporation Act entitles employees to delegate one member from among their ranks to the supervisory board of a corporation and its committees for every two members elected by the annual general meeting.

Succession planning for After an initial evaluation in 2000, a second comprehensive assessment process was conducted Managing Board based on for Wienerberger management in 2006. This analysis provides the Personnel and Nominating assessment Committee with basic information to be used in succession planning for the Wienerberger Managing Board. In a specific case it formed the basis for the appointment of Willy Van Riet as Chief Financial Officer of Wienerberger beginning on April 1, 2007, after Hans Tschuden had

28 announced his intention to join Telekom Austria AG. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance Corporate Governance Report The Company Review of Operations Segments Financial Statements Service

The Supervisory Board of Wienerberger includes no former members of the Managing Board Report on related party or key employees, and there are also no cross representations. No loans were granted to the transactions members of the Supervisory Board or Managing Board, and no agreements have been concluded with these persons. Information on related party transactions is provided on page 124 of the notes.

The 137th Annual General Meeting nominated KPMG Austria GmbH Wirtschaftsprüfungs- Disclosure of und Steuerberatungsgesellschaft to audit the annual financial statements and consolidated financial auditor’s fees statements of Wienerberger AG. In addition to this function, KPMG also provides tax and financial consulting services for the Wienerberger Group through its global network of partner offices. Consulting fees charged by KPMG, excluding the audit of financial statements, totaled less than € 0.4 million in 2006. The fees for the audit of the Group and related services totaled € 1.4 million. In 2007 there are only a few contractual agreements for the provision of project-related consulting services.

A management letter prepared by the auditor as well as a report by this firm on the efficiency Extensive risk of risk management in the Wienerberger Group was presented to the Chairman of the Supervisory management does not require specific Board, discussed by the audit committee and reported to the Supervisory Board. The risk analysis department prepared together with an external consultant indicated that the specific circumstances associated with the risk situation of the Wienerberger Group could not be optimized in a reasonable manner through the establishment of a traditional internal audit function. Therefore, internal controlling and audit functions are carried out by Group controlling to avoid additional costs, and evaluated by the auditor based on a questionnaire with a focus that varies each year. The Managing Board reports to the Supervisory Board once each year on planning as part of this control system and the most important results of control measures.

Wienerberger AG has issued 74.2 million shares of common stock. There are no preferred “One share – one vote” shares or limitations on common shares. Therefore, the principle “one share – one vote” applies in applies in full; disclosure of change of control full. According to the Austrian Corporate Takeover Act each shareholder will receive the same clauses price for his or her Wienerberger shares in the event of a mandatory offer. Wienerberger AG has no core shareholder. The shareholder structure is described on page 35. Change of control clauses are included in the terms of the corporate bond 2005, the hybrid bond 2007 and the syndicated term loans of 2005 and 2006.

The principles of the remuneration policy and detailed information on the compensation paid Current data on to each member of the Wienerberger Managing Board and Supervisory Board as well as an overview compensation and directors’ dealing of the shares held by these persons is provided on the following pages. Current updates on the on the website purchase and sale of Wienerberger shares by members of the Managing and Supervisory Boards are disclosed on the Company’s website under “Directors’ Dealing”.

Under consideration of the above-mentioned modification to the internal audit function, Full implementation Wienerberger meets all rules of the Austrian Corporate Governance Code, even those that have of the code only recommendation character.

29 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Remuneration Report

Remuneration report The remuneration report summarizes the principles that are used to determine the remuner- explains amount and ation for the Managing Board of Wienerberger AG, and also provides details on the amount and structure of payments to Managing and structure of payments to these persons. In addition, it includes information on the underlying prin- Supervisory Boards ciples and amount of compensation paid to the members of the Supervisory Board as well as data on the number of shares owned by members of the Managing Board and Supervisory Board. The Supervisory Board has transferred the determination of remuneration for the Managing Board of Wienerberger AG to the Presidium, which also serves as the Remuneration Committee.

Goal of remuneration In accordance with Austrian law, the Managing Board is appointed for a specific term of office systems is to reflect the that equals a maximum of five years. The employment contracts for the individual members of the success of the company Wienerberger Managing Board are prepared by the Remuneration Committee together with an external consultant, and the amount and structure of compensation is defined for the full contract period. The goal of the remuneration system is to provide the members of the Managing Board with compensation that is appropriate in national and international comparison (building materials sector) in accordance with their functions and scopes of responsibility.An important element of this remuneration system is a high variable component, which reflects the success of the company.Total compensation is divided into fixed, variable and share-based components, whereby the variable component is based on profit after tax and the share-based component on the mid- to long-term development of the company.

Fixed base salary tied to The fixed base salary reflects the scope of responsibility of the Managing Board member and, responsibilities, annual following common practice in Austria, is divided into fourteen installments and paid at the end of bonus on profit after tax each month. This results in different base salaries that correspond to the individual duties as well as the related strategic and operating responsibilities of the various board members. The annual bonus represents a variable cash payment that is dependent on the base salary as well as consolidated profit after tax before minority interest, and thereby also reflects the financing costs associated with the Group’s growth course. The variable component of salary is limited to 200% of the annual fixed salary for the Chief Executive Officer and 150% for all other members of the Managing Board. The variable cash compensation is verified by the auditor and paid in the following year.

Over 50% of compensation Cash payments to the members of the Managing Board totaled € 3.9 million for 2006 (2005: is variable € 3.6 mill.). Of this amount, € 1.7 million represent fixed base salaries and € 2.2 million are variable components that will be paid in 2007.

Cash compensation Managing Board 2005 2006 in EUR Fixed Variable Total Fixed Variable Total Wolfgang Reithofer 626,352 667,873 1,294,225 642,317 742,361 1,384,678 Hans Tschuden 307,929 441,083 749,012 315,778 473,667 789,445 Heimo Scheuch 307,929 441,083 749,012 315,778 473,667 789,445 Johann Windisch 384,912 441,083 825,995 394,722 495,854 890,576 Total 1,627,122 1,991,122 3,618,244 1,668,595 2,185,549 3,854,144

Stock option plan to The share-based compensation for the Managing Board is based on a stock option plan for key synchronize interests managers of the Group, which was approved by the Annual General Meeting of Wienerberger AG

30 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance Remuneration Report The Company Review of Operations Segments Financial Statements Service

on May 8, 2002. The stock option plan represents a form of remuneration with a long-term incen- tive. The number of allocated options is dependent on the fulfillment of annual performance goals. In order for the 2006 options to become valid, actual results must equal at least 95% of budgeted profit after tax before minority interest for the Group. If actual results are between 95 and 100% of the target, the number of options is allocated on a proportional basis. For the business year 2006 CEO Wolfgang Reithofer was allocated 18,000 options and the other members of the Managing Board, Heimo Scheuch, Hans Tschuden and Johann Windisch, were allocated 15,000 options each for Wienerberger shares at an exercise price of € 38.50. Subsequent changes in the performance targets are prohibited after the allocation of the share-based compensation.The terms of the 2006 stock option plan and the valuation of the options are described in the notes on page 124.

The members of the Managing Board require the approval of the Supervisory Board before Other activities require they may enter into any activities outside the scope of their work with Wienerberger.This guaran- approval of Supervisory Board tees that neither the time required nor the related compensation could lead to a conflict with their duties for the company. Any outside activities that involve seats on supervisory boards or comparable positions for publicly traded companies are listed on page 26 and also disclosed on the Wienerberger website. No compensation is provided for positions in Group companies.

All members of the Managing Board are covered by defined contribution pension agreements Severance pay is that require the company to make a fixed contribution each year.The Chief Executive Officer also regulated by Austrian law has an “old” pension agreement that guarantees a fixed indexed pension payment. The company has no obligations above and beyond these agreements. Contributions to pension funds (defined contribution commitments) and provisions for pensions (defined benefit commitments) totaled € 1,211,919 for the members of the Managing Board during the reporting year (2005: € 1,075,475). The members of the Managing Board are entitled to severance compensation on the termination of employment in accordance with legal regulations in Austria, which depends on total compensation as well as the length of service with the company. Legal requirements define the maximum severance compensation as one full year’s compensation, whereby the entitlement is forfeited if the employment relationship is terminated by the employee. Severance compensation for the Chief Executive Officer may equal a maximum of two year’s compensation. The addition to the provision for severance compensation totaled € 932,260 for 2006. Payments of € 595,480 were made to former members of the Managing Board and their surviving dependents in 2006 (2005: € 588,789).

The AGM on April 27, 2006 approved a new remuneration system for the Supervisory Board: AGM approves new Each member of the Supervisory Board receives reimbursement for cash expenses as well as fixed remuneration system for Supervisory Board remuneration of € 10,000 per year. In addition, each committee member also receives € 5,000 per year and committee. This fixed remuneration will be adjusted on the basis of the Statistik Austria consumer price index for 2005 or any other subsequent index. Furthermore, every member of the Supervisory Board will receive performance-based remuneration equal to 0.07‰ of profit after tax before minority interest for the business year, as shown in the audited and unqualified consolidated financial statements. The Chairman receives twice this amount and the Vice-Chairman one and one-half this amount. If a member of the Supervisory Board is not active during the full business year, the remuneration is paid in proportion to the time available. If members of the Supervisory Board take on a special function in the interests of the company in this capacity, the Annual General Meeting may approve remuneration for their activities. Duties and taxes charged on remuneration

31 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 to the members of the Supervisory Board are carried by the company. For 2006 (payment in 2007) and 2005 (payment in 2006) remuneration for the members of the Supervisory Board totaled € 305,197 and € 294,650, and is distributed as follows:

Supervisory Board Remuneration in EUR 2005 2006

Friedrich Kadrnoska, Chairman 74,456 70,567 Christian Dumolin, Vice-Chairman 52,119 52,926 Karl Fink 0 20,189 Rupert Hatschek 1) 29,782 10,095 Peter Johnson 19,165 30,284 Franz Lauer 1) 29,782 10,095 Harald Nograsek 29,782 30,284 Claus Raidl 29,782 30,284 Wilhelm Rasinger 0 20,189 Franz Rauch 29,782 30,284 Total 294,650 305,197

1) Resigned from the Supervisory Board on April 27, 2006

No additional No compensation is paid for services outside the above-mentioned Supervisory Board duties, compensation for in particular for consulting or arranging services. The salaries received by the employee represen- Supervisory Board tatives as part of their employment contracts represent exceptions to this rule.

Managing and Supervisory The members of the Managing and Supervisory Boards have voluntarily agreed to disclose Boards voluntarily disclose their holdings in shares of Wienerberger AG. In accordance with § 48 of the Austrian Stock holdings in Wienerberger shares Exchange Act, the purchase or sale of shares by members of the Managing and Supervisory Boards is reported to the Austrian Financial Market Authority and also disclosed on the Wienerberger website under “Directors’ Dealing”. The number of Wienerberger shares held by the members of the Managing and Supervisory Boards at the end of 2006 totaled 243,059.

Number of shares owned 1.1.2006 Purchase Sale 31.12.2006 Managing Board Wolfgang Reithofer 168,041 0 0 168,041 Heimo Scheuch 18,120 18,000 22,322 13,798 Hans Tschuden 8,997 15,000 7,500 16,497 Johann Windisch 25,000 15,000 30,000 10,000 Supervisory Board Friedrich Kadrnoska 759 0 0 759 Christian Dumolin 23,690 0 0 23,690 Karl Fink 0 0 0 0 Peter Johnson 0 0 0 0 Harald Nograsek 0 0 0 0 Claus Raidl 0 0 0 0 Wilhelm Rasinger 0 10,274 1) 0 10,274 Franz Rauch 0 0 0 0 Total 244,607 58,274 59,822 243,059

32 1) Wilhelm Rasinger owned the above number of shares in Wienerberger before he was appointed to the Supervisory Board. WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance Remuneration Report The Wienerberger Share The Company Review of Operations Segments Financial Statements Service The Wienerberger Share

Uncertainty concerning the development of the oil price and the political situation in the ATX hits new record Middle East had a negative impact on stock markets at the beginning of the year. However, investor with 4,464 points confidence improved during the last months of 2006 and the major indexes climbed to levels that have not been reached in years. In spite of the highs and lows registered on international exchanges, good performance was recorded by the English FTSE 100 Index with +11% and the German DAX with +22%. The ATX moved from one high to the next at the start of the year, but came under strong pressure during the second quarter and faced a substantial correction to a level of 3,300 points. This trend reversed near the end of 2006, with the ATX outperforming most other stock indexes and closing the year with a plus of 22% to 4,464.

After a disappointing year for American markets in 2005, solid corporate earnings, a lower oil Sound growth in price and stable economic indicators provided support for the key US stock indexes in 2006. European economy supports construction The Dow Jones Industrial closed at 12,463 points, which reflects an annual performance of +16%. sector The S&P 500 ended the year with a plus of 14%. The international construction branch profited from rising economic momentum in Europe and renewed activity on the construction sector in Germany during 2006. The Dow Jones Euro Stoxx Construction & Materials closed with overall strong performance of +38% and the Bloomberg 500 Building Index with +32%.

The Wienerberger share started 2006 at an annual low of € 33.45, but rose to a new record Share price under high of € 44.81 by April. In May the share price came under massive pressure that triggered an pressure in mid-2006, but new high reached adjustment to € 32.11 during June. This development was caused by quarterly results that remained at year-end below expectations due to the long winter in Eastern Europe, rising energy prices, high start-up costs for plants and the substantial weakening of new residential construction in the USA. However, a clear improvement in earnings, renewed strength in the European construction sector, and a decline in energy prices formed the basis for strong recovery during the last months and the Wiener- berger share closed 2006 at a new all-time high of € 45.00.

Development of the Share Price

€ 55 € 200 mill.

€ 50

€ 150 mill. € 45

€ 40 € 100 mill. € 35

€ 30 € 50 mill.

€ 25

€ 20 € 0 mill. J06 F06 M06 A06 M06 J06 J06 A06 S06 O06 N06 D06 J07 F07

Wienerberger AG DJ Euro Stoxx Construction & Materials

Stock exchange turnover of the Wienerberger share ATX – Austrian Traded Price Index per week (in € mill. double-count method)

33 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Liquidity Key Data per Share 2004 2005 2006 Chg. in % in € mill. Earnings in € 2.54 2.66 2.95 +11 25 Adjusted earnings 1) in € 2.54 2.67 3.02 +13 22.5 21.0 20.9 Dividend in € 1.07 1.18 1.30 +10 20 Free cash flow 2) in € 4.25 3.06 3.71 +21

3) 15.5 Equity in € 19.64 20.26 21.71 +7

13.9 15 Share price high in € 36.35 39.10 45.00 +15 Share price low in € 21.10 28.12 32.11 +14 10 Share price at year-end in € 35.15 33.80 45.00 +33 P/E ratio high 4) 14.3 14.6 14.9 - 5 P/E ratio low 4) 8.3 10.5 10.6 - P/E ratio at year-end 4) 13.8 12.7 14.9 - 0 Q1 Q2 Q3 Q4 Q1 Shares outstanding (weighted) 5) in 1,000 69,598 73,196 73,309 0 06 06 06 06 07 Market capitalization at year-end in € mill. 2,607.0 2,506.9 3,337.6 +33 Ø stock exchange turnover Average stock exchange turnover/day in € mill. 12.2 16.3 17.8 +9 of Wienerberger share/day

1) Before amortization of goodwill, and excluding non-recurring income and expenses 2) Cash flow from operating activities minus cash flow from investing activities plus growth investments 3) Equity including minority interest 4) Based on adjusted earnings per share 5) Adjusted for treasury stock

Wienerberger share The trading volume of Wienerberger shares again rose by a substantial amount in 2006. With maintains high liquidity annual turnover of € 4,376.5 million or an average of 464,788 shares per day (purchases and sales, double-count method), the liquidity of the Wienerberger share roughly matched the level reached in 2005. This led to a shift from seventh to tenth place in a ranking of top issues on the Vienna Stock Exchange. Over-the-counter sales totaled € 1,340.8 million in 2006, compared to € 1,629.7 million in the previous year. On the Austrian Futures and Option Exchange (ÖTOB) 26,498 option contracts with a total volume of € 101.3 million were traded for Wienerberger stock.

Dividend policy calls Wienerberger follows a consistant dividend policy, which calls for a payout ratio of roughly for payout ratio of 45% 45% of profit after tax and minority interest (based on 74.2 million issued shares). The Managing on net income Board will therefore recommend that the Annual General Meeting on May 10, 2007 approve the payment of a € 1.30 dividend per share, which represents an increase of 10% and a total distribution of € 95.3 million. This reflects a yield of 3.4% based on the average share price for 2006 and 2.9% at the year-end rate. Wienerberger intends to continue this dividend policy in the future, in order to offer shareholders an attractive minimum return on their invested capital.

Shareholder Structure Pure free float company Wienerberger AG is listed with 74.2 million shares of zero par value common stock (bearer with € 3.3 billion shares, no preferred or registered shares) in the Prime Market segment of the Vienna Stock capitalization at year-end 2006 Exchange. In the USA the company trades on the OTC market through an ADR Level 1 Program of the Bank of New York. With market capitalization of € 3.3 billion and a weighting of 5% in the ATX at year-end 2006, Wienerberger is one of the largest listed companies in Austria.

34 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Wienerberger Share The Company Review of Operations Segments Financial Statements Service

Wienerberger is a 100% free float company without a core shareholder. AIM Trimark, a Shareholder Structure Canadian investment company, holds over 5% of the outstanding Wienerberger shares in a number by Country of its publicly traded funds. Other large shareholders with blocks of more than 5% are Capital 8 7 Research and Management as well as Lansdowne Partners. 6 1 5 4 Wienerberger has a widely diversified shareholder structure, which is typical for an interna- 2 tional publicly traded company. Of special note is the fact that the majority of professional investors 3 come from Anglo-Saxon countries, the USA (34%) as well as the United Kingdom and Ireland (22%).

The share of private investors totals only 9%, whereas 91% of shareholders are institutions. 40% of 1 USA 34% the investors are growth-oriented (growth or GARP investors, see the graph on the right). 2 UK & Ireland 22% 3 Austria 17% 4 Germany 7% Wienerberger Hybrid Bond 5 North Europe 6% 6 France 3% In order to strengthen its capital base, Wienerberger successfully placed its first hybrid bond 7 Switzerland 3% in February 2007 and thereby also diversified its range of financing sources. Strong demand – the 8 Other 8% bond was oversubscribed nearly 11-times – led us to raise the issue volume from the originally planned € 400 to 500 million. The bond was placed with Austrian (16%) and international investors (84%), above all in Great Britain, Germany, the Benelux countries, Switzerland and France. The security has a perpetual maturity as well as a fixed coupon of 6.5% for the first ten years, and will Shareholder Structure convert to a variable interest rate based on the 3-month EURIBOR plus 3.25% after this time. Stan- by Investor Type dard & Poor’s rated the Wienerberger hybrid bond “BB+” and Moody’s awarded a “Ba1”. The hybrid 7 6 bond trades on the official markets of the Vienna and Frankfurt Stock Exchanges. 1 5

Investor Relations 4 Professional investor relations have had a high priority at Wienerberger for many years. This 3 2 function reports directly to the Chief Executive Officer, but its work is also integrated closely with the Chief Financial Officer.The goal of our investor relations activities is to provide a true and fair 1 Growth 31% view of the company, and thereby facilitate a correct valuation of the Wienerberger share. 2 Value 29% 3 GARP 9% 4 Retail 9% Wienerberger again held several road shows and participated in investor conferences in Europe 5 Index 9% 6 Hedge funds 6% and the USA during the past year. The Managing Board and the investor relations team met 7 Other 7% hundreds of investors throughout the world and discussed the company as well as its development and strategy in conference calls and video meetings. The Wienerberger website represents an important communications medium, and provides a wide range of information on the company as well as download versions of annual and interim reports, a financial calendar, current presentations, live webcasts of the annual general meeting and press conferences, recordings of conference calls, analysts’ earnings estimates and current reports, and a specially designed online annual report (annualreport.wienerberger.com).

Our efforts to continually improve investor relations were also recognized by the financial Annual report receives community in 2006, with Wienerberger winning several prizes. At the world’s largest competition 2 grand awards at the ARC in New York for annual reports – the ARC (Annual Report Competition) Awards in New York – an international jury of experts from the fields of investor relations, journalism, design and photography presented the Wienerberger Annual Report 2005 with a number of awards. For the outstanding quality of the report we received Gold Awards for financial data, written text, interior design and photography

35 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 as well as a Bronze Award for the overall annual report. However, the most important recognition was signified by two Grand Awards for financial data and written text, which ranked Wienerberger number one among more than 1,900 submitted reports for the best analysis of results and written content in the world.

Fifth best report The Wienerberger Annual Report 2005 also received an excellent rating in the Annual Report worldwide according on Annual Reports. For more than ten years, e.com, an independent Belgian consulting company, to Annual Report on Annual Reports has evaluated the annual reports of the major international corporations according to 25 categories. Wienerberger was included in this analysis for the first time in 2005 and ranked 18th, but reached the top in 2006 with a world class rating as the global number five. Our Annual Report 2005 was also recognized at the Austrian Annual Report Awards for publicly traded companies, where we won first prize as the best annual report in Austria for the third year in succession.

Coverage expanded The coverage of our company by a large number of well-known Austrian and international in 2006 investment banks maintains the visibility of the Wienerberger share in the financial community. During the past year, Citigroup (London) and Davy Securities (Dublin) initiated coverage on Wienerberger. As of March 2007 Wienerberger is covered by 12 analysts, and the following brokers publish regular reports on Wienerberger and its stock (in alphabetical order): ABN Amro (London), CAIB (Vienna), Citigroup (London), Credit Suisse First Boston (London), Davy Securities (Dublin), Deutsche Bank (London/Vienna), Erste Bank (Vienna), Goldman Sachs (London), MAN Securities (London), Merrill Lynch (London), RCB (Vienna) und UBS (London).

Information on the Wienerberger Share Investor Relations Officer Thomas Melzer Shareholders’ Telephone +43 (1) 601 92-463 E-mail [email protected] Website www.wienerberger.com Online Annual Report annualreport.wienerberger.com Vienna Stock Exchange WIE Reuters WBSV.VI Bloomberg WIE AV Datastream O: WNBA ADR Level 1 WBRBY ISIN AT0000831706

36 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review THE COMPANY Corporate Governance The Wienerberger Share The Company Strategy and Business Model Review of Operations Segments Financial Statements Service Strategy and Business Model

The primary goal of Wienerberger management in the context of maximizing Total Share- Wienerberger is a holder Return (TSR) is to guarantee long-term sustainable growth in our core business and thereby growth company with high free cash flow further expand the Group’s leading market positions. Our corporate strategy is based on three main elements: a focus on the core business, profitable growth and a principal role in product innovation and cost leadership in our industry.

Focus on the core business Wienerberger concentrates on products for masonry, roofs and paving. We are the largest multi- Strategy to increase national supplier in our core business, and hold strong market positions with approximately 260 market positions for core business and plants in 25 countries and five export markets (also see pages 72 and 73). Our strategy for the core expand into new markets business is designed to establish and increase leading positions on all markets in which we are present. In addition, we will also expand step by step into new and promising markets, especially in the East. Revenues 2006 Bricks are the most popular building material in the world for new residential construction, by Product and are also used in the non-residential segment. Wienerberger has developed leading positions on 4 all relevant markets in Europe (with the exception of the Iberian Peninsula) and the USA in recent 3 years. Our innovative products, own technology and broad-based plant structure give us a decisive 1 competitive advantage. Hollow bricks generate 37% of Group revenues and 48% of EBITDA. The 2 facing brick product lines are responsible for 36% of revenues and 29% of EBITDA.

Clay roof tiles are used primarily to cover pitched roofs in Europe. More than half of clay roof 1 Hollow bricks 37% tiles are used in renovation, which leads to a lower dependency on cyclical new housing construction 2 Facing bricks 36% 3 Roofing systems 21% than hollow and facing bricks. The major features of the clay roof tile industry are growing market 4 Pavers 6% shares, stable cash flows and high profitability. Our clay roof tile activities in Belgium, the Nether- lands, France, Germany, Poland, Estonia and Switzerland as well as a 25% holding in Tondach Glein- stätten in Central-East Europe produce roofing systems made of clay. Bramac, a 50/50 joint venture EBITDA 2006 with Lafarge Roofing, manufactures concrete roof tiles for Central-East Europe. Clay roof tiles and by Product concrete tiles contribute 21% to revenues and 24% to EBITDA. 5 4 1 The fourth core product area is formed by pavers. We are represented in this sector by our 3 75% subsidiary Semmelrock as well as our wholly owned paver activities in the Benelux countries and Germany. Semmelrock was able to expand its leading position as a producer of concrete slabs 2 and pavers in Central and Eastern Europe with the acquisition of the Czech Colorbeton in October 2006. This product area generates 6% of revenues and 4% of EBITDA. 1 Hollow bricks 48% 2 Facing bricks 29% 3 Roofing systems 24% Profitable growth 4 Pavers 4% We define profitable growth as an above-average (in comparison to the building materials 5 Investments and Other -5% sector) increase in earnings of roughly 10% per year. The basis for this growth is formed by our integrated business model. The brick and clay roof tile business is capital-intensive. It requires a high initial investment and generates stable cash flows. Our maintenance capex in the core business is relatively low and totals only ca. 60% of depreciation. This leads to high free cash flows that can be used for growth projects, dividends, debt reduction or share buybacks.

37 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Ambitious profitability Our business model is designed to ensure that we only invest in profitable growth projects. criteria for growth projects We have set ambitious goals for these investments, which distinguish between bolt-on projects and external projects.

Target for bolt-on projects: We define bolt-on projects as the construction of new plants or extension of capacity as well 22% CFROI in year 3 after as smaller acquisitions in existing markets. The integration of these projects with our activities and the investment subsequent optimization allow us to realize synergies and increase earnings. For these projects, we require a cash flow return on investment (CFROI) of 22%, including synergies, in the third year after the start of the investment. Past performance has shown that we are able to meet this goal with CFROIs in excess of 20%, depending on the exact monitoring period.

Target for external External projects represent acquisitions that justify a higher investment for strategic reasons, projects: 16% CFROI in particular leading market positions held by the takeover candidates or entry into new markets. in year 3 after the investment For these projects, we have targeted a CFROI of 16%, after synergies, in the third year after investment. We also use external projects to improve the earnings power of the Group, which currently generates a CFROI of 12.0%. These projects form the basis for further bolt-on projects in later years.

Financial flexibility Our financing strategy is closely linked to the capital structure of the Group. The objective is through issue to maintain a sufficient equity ratio to safeguard the continuation of business activities and the of hybrid bond in February 2007 payment of dividends (payout ratio of 45%), and also secure adequate debt financing to realize our growth targets. In order to minimize the cost of debt and maintain the Group’s attractiveness for financial markets, any decisions involving a possible increase in debt are made with a view to maintaining the current ratings by Standard & Poor’s (BBB) and Moody’s (Baa2). Free cash flow will release approximately € 250 to 300 million for growth projects in 2007. In order to create additional flexibility for our growth strategy, we issued a hybrid bond in February 2007; this instrument is given a 50% equity credit by the rating agencies. The issue of shares will only be considered for major acquisitions that increase the value of the company.

Further growth in all Further growth steps are planned for all regions in which Wienerberger is present. We will regions planned for 2007 pursue this growth in 2007 through the construction of new plants, expansion of capacity and/or acquisitions depending on our market position in the specific country as well as the structure of the markets and competition.

New plants in Russia, In Eastern Europe Wienerberger holds strong positions on building material markets. These Bulgaria and Romania in markets are characterized by above-average growth in new housing construction. We therefore see planning or construction substantial long-term opportunities throughout this entire region, which has become a home market for us. Wienerberger will use its competitive advantages with respect to costs and products, and gradually increase its activities in Eastern Europe through acquisitions and the expansion of production capacity.We are continually evaluating opportunities to enter new regions, whereby we concentrate on growing markets in which bricks already hold a high share. The realistic chance to gain a leading position in a new market over the mid-term is also a decisive factor. Our first brick

38 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Strategy and Business Model Review of Operations Segments Financial Statements Service

plant in Russia started operations in October 2006 and is now undergoing optimization. We have also started construction of a plant in Kazan, 800 km east of Moscow, as well as on two production facilities in Bulgaria and Romania.

Growth opportunities in the mature markets of Western Europe are available through bolt- Strengthening of market on projects in all product areas. We utilize synergies created by acquisitions and the extension of shares in Western Europe with bolt-on projects capacity, and are thereby able to improve our earnings in stagnating markets. Furthermore, there are opportunities to increase the market share of bricks for load-bearing walls in France, the Nether- lands and Great Britain. In the roofing segment, we will form a homogeneous company in Germany following our acquisition activities in recent years and further optimize this business. This strategy will support the steady improvement of earnings in all countries.

The USA is the largest facing brick market in the world, and currently reports population Expansion of market growth of roughly 1% per year. For this reason, we view the USA as a long-term growth market position in USA with larger plants and stronger and important source of earnings for our Company in spite of the decline in new housing construc- direct sales tion that started in April 2006. We took a major strategic expansion step in the western region of the USA during June 2006 with the takeover of Robinson Brick, a brick producer and merchant in Denver, Colorado, that holds a leading market position with four plants and 17 retail centers in seven states west of the Mississippi. In Kentucky and Louisiana we strengthened our direct sales network through the acquisition of Modern Concrete, a brick merchant, in January 2007. The construction of larger plants and expansion of direct sales is an approach that we will also use in the future to steadily expand our business in the USA.

Non-core activities in the Wienerberger Group are combined under the Investments and Investments refinance Other segment. The strategy for the Pipelife joint venture, the fourth largest producer of plastic expansion in core business pipes in Europe, is to continuously improve earnings and strengthen its market positions. Pipelife again made substantial progress with the implementation of this strategy during the past year and recorded a further improvement in earnings.

For the owners of the Company, Wienerberger management has set a goal to maximize Total Maximization of TSR Shareholder Return (TSR). We view both factors – an increase in the price of our stock and with dividends and earnings growth dividend payments – as important. We have therefore defined a dividend payout ratio of approximately 45%, which will give shareholders a solid minimum return. We also want to grow profitably across all areas of our core business to form the basis for sustainable growth in the price of our stock in the future.

39 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Key Factors and Major Drivers for the Brick Business

New residential construction and renovation The pace of new residential construction on local markets has a major influence on the demand for bricks.1 Two of the most important drivers for new residential construction are population growth and consumer confidence in the individual countries. Bricks are also used for the construction of offices and public buildings. In contrast, the demand for clay roof tiles is driven more by renovation (55%) and less by new construction (45%). Focus on the core business and profitable growth2 The core business of Wienerberger – products for masonry, roofs and paving – is capital-intensive. After a high initial investment, only ca. 60% of depreciation is required for maintenance, Local rationalization and environmental protection measures. This releases substantial free cash flows that can be used, above all, for profitable growth. presence3 and As the largest producer of bricks in the world, we invest at least € 250 million each year to increase decentralized our existing positions and develop new markets. organization In order to fully cover a regional market with bricks, a company needs a network of production facilities as well as an organization that places high value on decentralized responsibility and local know-how. The supply radius is 250 km for hollow bricks, 500 km for facing bricks and 800 km for clay roof tiles. Different regional and cultural preferences and construction standards influence the development of markets and products. Wienerberger can rely on a network of plants in 25 countries, which makes it easier to compensate for fluctuations on individual markets.

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Products and product development Wienerberger has established a position as the most innovative company in the brick industry through its many years of successful development work. Our close contacts with architects and construction firms give us new impulses and suggestions for the improvement of our products. In the hollow brick segment, our goal is 4to continuously improve the technical properties of our products – for example thermal and sound insulation, load-bearing capacity and efficient laying. In the facing brick, clay roof tile and paver segments, we concentrate on the early identification of architectonic trends. We also adjust our offering to meet local needs and tastes, and continually add new items to our product lines. Strong market positions and customer

Our goal is to develop strong market positions5 and customer relations in all relations markets in which we are active. We work to meet this goal with high-quality products and services as Cost and well as sustainable and responsible capacity actions by all our employees. management 6The ongoing optimization of costs throughout the company – in production (above all with respect to the use of energy) as well as administration and sales – is part of the Wienerberger culture. Our strong market positions are based on a network of plants, with facilities in all our markets and product segments. This allows us to actively manage capacity and ensure a high level of utilization, which Know-how represents a major cost factor in our capital-intensive industry. and synergies The competitive advantage of the Wienerberger Group is based on detailed knowledge of the local markets by all operating personnel as well as the use of group-wide synergies7 through the exchange of know-how in the areas of technology, marketing, product development and procurement.

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Identification and analysis Global operations expose the Wienerberger Group to a variety of risks. In principle, Wiener- of 15 major risks as part of berger views risk as the potential divergence from corporate goals and therefore as a range of poten- risk management process tial future scenarios. Risk covers the possibility of a loss (risk in the literal sense of the word) as well as the failure to realize an additional gain. The goal of our risk management process is to identify risks at an early stage and implement suitable measures to minimize any variance from corporate goals. This procedure requires the identification, assessment, management and monitoring of risks, and represents an integral part of our internal risk management activities. The risk assessment that was prepared in prior periods is updated annually by the Management Committee. Based on the probability of occurrence and potential impact on the Group, the identified risks are weighted according to their significance and the 15 major risks are analyzed in detail. In 2006 this process led to a change in the weighting of individual risks as well as the addition of new risks to our risk catalogue. The most important risks are described in detail below.

Market Risks Minimization of market Market risks arise from developments and price structures in the major economies in which risks through geographic Wienerberger operates across Europe and the USA. In order to minimize the impact of individual diversification markets on Group earnings, we pursue a strategy of geographical diversification and concentration on our core business. Our decentralized plant network and broad-based management team as well as the leading positions of Wienerberger prevent specific market and production risks from threatening the entire Group and limit the potential impact of such events to parts of the local organization.

Procurement, Production, Investment and Acquisition Risks Risk of rising energy We work to counteract the risk of rising energy costs by continuously monitoring the situa- costs met by hedging tion on key markets, concluding forward contracts, defining procurement prices at an early point in time and closing long-term supply contracts. For 2007 we have already signed contracts that cover a large part of our natural gas and electricity requirements. A detailed description of our energy procurement policy is provided on page 70. However, our main activities in this area are directed to optimizing the use of energy in production and sales. Excess capacity can lead to pressure on prices and uncovered costs. In order to minimize any impact on earnings, we regularly evaluate our capacity and make any necessary adjustments through temporary shutdowns or the relocation of production to reflect market demands.

Group-wide transfer The increasing focus on growth projects has made the efficient implementation and integra- of know-how minimizes tion of these acquisitions more important. We rely on the group-wide transfer of know-how implementation and integration risk through the exchange of experts who support local management as well as clear profitability targets for growth projects (see strategy and business model, page 37) to hold this risk as low as possible.

Financial Risks Hedging of exchange Exchange rates and interest rates are the major sources of financial risk. Foreign exchange rates and interest rates swaps are used to secure appropriate coverage between assets and liabilities, and thereby decrease the impact of exchange rate fluctuations on Group equity. In recent years Wienerberger has been able to significantly reduce the risks associated with foreign exchange and interest rates through its hedging activities. A description of the financing situation and hedging measures is provided in the financial review on page 66; exchange rate risk is discussed on pages 121 and 122 of the notes.

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Legal Risks Depending on the market position in individual countries and the size of planned acquisitions, Cartel risks analyzed transactions may be dependent on the approval of cartel authorities. These approval procedures extensively in early stage of acquisitions could lead to delays or, in individual cases, the prohibition of specific mergers or acquisitions. Wienerberger extensively evaluates the cartel risk associated with an acquisition together with national and international legal and business experts during the early stages of work on a project in order to minimize this risk. The cartel authorities have never rejected a proposed acquisition by the Group so far. Due to our positions in specific markets, the pricing policy of our subsidiaries is actively monitored by competition authorities. Price-fixing agreements are not part of Wienerberger business policies, and our internal guidelines expressly prohibit such activities and call for sanctions in the event of violations.

From the present point of view, there are no risks that could endanger the continued existence No identifiable risks that of the Wienerberger Group. Our broad geographical diversification limits the largest single risk to could endanger the entire Group less than 20% of current EBITDA. If all top 15 risks should materialize at the same time, less than one-third of equity would be affected. Insurance policies have been concluded to cover specific guarantee or warranty risks as well as possible damages. The scope of these insurance policies is analyzed regularly based on the maximum cost associated with the insured risk and the relevant insurance premium. In order to counter potential risks that could result from the wide variety of tax, competition, patent, cartel and environmental regulations and laws faced by Wienerberger, management decisions are based on consultations with company and outside experts. Compliance with regulations and the supervision of employees in their interaction with risk is a basic responsibility of all Wienerberger managers.

In order to avoid and manage risk the local companies deliberately take on risks only as part Risks only taken on in of their operating activities and always evaluate these risks in relation to potential gains or oppor- operating business tunities. In particular, speculative actions outside the scope of operating activities are prohibited. Risks that are not directly related to operating activities, for example financial risks, are monitored and managed by the holding company of the Group.

The most important instruments for the monitoring and management of risk are planning Effectiveness of risk and controlling processes, Group guidelines and regular reporting. Reporting plays a major role in management audited and confirmed the monitoring and control of risks associated with normal business operations. The Group auditor evaluates the effectiveness of Wienerberger risk management each year, and reports to the Super- visory Board and Managing Board on the results of this analysis. The functional capability of Wiener- berger risk management was examined and confirmed by the auditor.A detailed description of the risks facing the Wienerberger Group is provided in the notes on page 120.

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Hollow bricks (1) Wienerberger hollow brick Hollow bricks are used for load-bearing exterior and interior walls as well as for non- brand: POROTHERM load-bearing partition walls or fillwork. A wall made of hollow bricks is normally not seen after (POROTON in Germany) completion because it is covered with plaster or paneling.

In any case, the technical advantages and features of these monolithic walls are convincing: high compressive strength, excellent thermal insulation and heat accumu- lation, sound insulation, high fire resistance (nonflammable), moisture regulating. In short, walls made of bricks create an unmistakably pleasant comfort atmosphere.

Wienerberger hollow bricks are sold under the POROTHERM brand (PORO- TON in Germany), and are optimized to meet these special applications and requirements. Examples are extreme thermal insulating, thick clay blocks for exterior walls, special heavy clay blocks for improved sound insulation and seismic-resistant bricks for safe construction in earthquake zones.

The Wienerberger hollow brick system also includes brick lintels and brick ceiling systems, 1 which makes it possible to build an entire house with bricks – from the basement to the roof.

Pavers (2) Wienerberger paver brands: Pavers by Wienerberger are produced as clinkers made of TERCA (clay) and clay or as concrete tiles and slabs. These materials are used by homeowners (for driveways, paths, SEMMELROCK (concrete) terraces and garden design) as well as in public areas (sidewalks, open areas and pedestrian zones).

The large range of shapes, colors and surface structures offered by TERCA clay pavers and SEMMELROCK concrete pavers place virtually no limits on the esthetic fantasy and durability of paver designs. SEMMELROCK concrete pavers also permit the spatial structuring and design of garden landscapes, for example with products for slopes, planters and fencing systems.

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Roofing Systems (3) Clay roof tiles are used primarily to cover pitched roofs. They not only provide sustainable Wienerberger clay roof protection for houses from the weather, but also represent an important design element for tile brand: KORAMIC architects. Clay roof tiles are not only used in new construction, but also to a large extent in the renovation of existing buildings.

Wienerberger clay roof tiles are sold under the KORAMIC brand. They are available in a wide variety of forms (pressed or plain tiles), colors and surfaces (natural, glazed, sanded or engobed). These product features create a unique and attractive look for a roof made of clay tiles. For each type of tile, Wienerberger offers a complete line of special tiles and accessories such as ridge tiles, verge tiles and much more. 3 Through its 50% holding in Bramac the Wienerberger Group also produces concrete tiles that are used to cover pitched roofs, primarily in Austria and the southeast region of Europe. Concrete roof tiles are used above all in new residential construction.

Facing Bricks (4) Facing bricks are used in visible brick architec- Wienerberger facing ture: facades and interior walls are made from or brick brand: TERCA 4 covered with these bricks. The necessary functions of the load-bearing walls are provided by hollow bricks or other building materials such as concrete or calcium silicate blocks.

2 A wall made of facing bricks is an esthetic calling card for a home, and also provides optimal protection from the weather – there is no maintenance or expensive renovation in later years. Facing bricks can also be used in a wide range of decorative applications: for example interior walls, exterior enclosures, arches or chimney cappings. Wienerberger facing bricks are sold under the TERCA brand. They open up a wide range of design alter- natives through the combination of colors, shapes and surface structures – a feature that is provided by hardly any other building material.

Facing bricks can also be combined together in storey-high prefabricated elements for fast construction. Especially in the area of non-residential construction, brick architecture can therefore play an important role in modern, economic building.

Similar to clothing, architecture is also subject to fashion trends. In this respect the development of new colors, surface structures and special shaped bricks plays an important role. The goal of Wienerberger is to meet the design requirements of architects and builders, and progress with the times.

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R&D is one of the With its 5,000 year history, the brick is not only one of the most successful building materials key points in our from a historical point of view. It still remains one of the most important materials for construc- strategic planning tion throughout the world in the 21st Century.Today the brick is a modern, technologically mature and esthetically versatile product. For this reason, research and development (R&D) represents an integral part of our strategic planning. The focal points of R&D activities are derived from our goal to establish and maintain cost and technology leadership and our pursuit of product innovation to protect our market positions and expand our competitive advantage. This is reflected in the development of new technologies and optimization of existing production processes as well as the continuous improvement of our products. In 2006 we invested roughly € 5 million in our R&D activities.

Close cooperation with R&D is managed centrally, but implemented locally. Our engineering and product manage- local teams ment team includes roughly sixty men and women who work together with our local engineering departments to optimize products, systems and production technologies.

Energy task force to The sharp rise in energy prices over the last two years has also shifted one focus of our engi- optimize use of energy neering department to the more efficient use of primary energy sources (gas, coal, crude oil) in our throughout the Group plants. For this purpose we have created our own energy task force, which includes a manager from each of our market countries. Internal energy benchmarks have been defined as the basis for establishing an international know-how transfer on the use of energy.The data gathered with this project will now be used to successively optimize energy use throughout the Group. First results have already been registered in Hungary, the Czech Republic and Poland, where energy consumption fell by up to 10% in 2006.

Know-how transfer to Any brick plant is only as good as its adaptation to the available raw materials, and this creates improve production two challenges for our engineering department: tracking down the “perfect” raw material on site is processes and search for raw materials decisive but, at the same time, the specifications of the production process must also be fine-tuned to match the existing supplies. This begins with the type and quantity of additives, and ends with the optimal drying and firing time. The raw material not only has a major influence on the quality of bricks, it is also a determining factor for the production process. Wienerberger achieves technology leadership by the ongoing exchange of know-how throughout the Group. With the knowledge gained from roughly 260 plants, our engineering department provides support for our local teams in the planning and construction of production facilities and selection of equipment as well as the search for raw materials.

Focus on optimizing Innovation is key for our activities in product and system development. This takes place through properties of bricks and the ongoing optimization of the properties of bricks and structural elements, and also through the structural elements design of the bricks. For example, the EU has defined stability, energy savings, thermal and sound insulation, fire protection and seismic resistance as the most important demands on buildings. These requirements have been translated into new European norms, which have become more stringent in all areas over recent years. Wienerberger works continuously to improve the physical properties of its bricks, and has established a position as the most innovative company in the industry through many years of successful development. In recent years, substantial progress has been made in a number of important areas.

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For example, the filling of brick voids with Perlite, a pure mineral thermal insulating material Excellent thermal made of expanded volcanic rock, has allowed Wienerberger to realize the current top thermal insu- insulation with volcanic filling material lating value of 0.08 ␭ for bricks. Our activities during the past year were also directed to further improving the properties of this product generation. We are steadily increasing our production capacity for this product in Germany to meet the strong demand.

We also made progress in increasing sound insulation during the past year, and launched a Improved sound number of bricks with significantly improved properties in several countries. One example is the insulation in bricks Porotherm 25AKU, which is made of special ceramics with a unique void configuration and was successfully introduced to the market in the Czech Republic.

A number of regions in Southern Europe are classified as seismic areas, and the safety require- Greater stability and ments for buildings have become more stringent in recent years following the introduction of new load-bearing capacity for construction in seismic standards and regulations. For this reason, an important factor for the further development of our areas bricks is the improvement of the load-bearing capacity and stability of brick walls. These properties are determined through so-called shaking table tests or cyclical shear tests, which place a building on an earthquake simulator and analyze the results of various earthquake intensities, e.g. the wall is shaken until it breaks. Our work in this area is pioneering and allows us to integrate the results of these trials into the development of special seismic-resistant bricks and systems, which have substantially higher stability and load-bearing capacity than standard bricks because of their special properties. The Wienerberger Porotherm seismic-resistant brick is one successful example of a product developed especially for regions with a high risk of earthquakes.

The brick is also subject to continuously changing architectonic trends and fashion dictates. Design innovations for For this reason, Wienerberger works continuously with architects and builders to expand the range facing bricks, clay roof tiles and pavers of its facing bricks, clay roof tiles and pavers. The individual Group companies modify this offering to meet local traditions as well as the needs of customers and architects based on their close contacts with the market. The general trend in clay roof tiles shows a preference for larger sizes and flatter straight and smooth-surface products, whereby there are considerable local differences. We added more than 35 new clay roof tile models to our product line during the past year, including sanded types with an antique appearance. Our facing brick line was expanded to include dark and anthracite-colored, rustic rough and smooth elegant models that give facades an elegant appearance when combined with light mortar.At present the Wienerberger product line includes roughly 1,500 different facing bricks and 550 types of clay roof tiles.

47 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 The most natural thing in the world: Brick production

1 2

7 8

Raw materials management (1) Preparation (2-6) Shaping (7) In a first step, experienced geologists analyze In the second step, the clay is collected from This step involves the actual shaping of the the quality of the raw material. The excavated the stockpiles and transported in box feeders. brick. The prepared clay is pressed through clay is then layered in stockpiles, where it is It is then prepared through a grinding (pam dies by extruders, and then cut into individual stored for roughly one year in the open to mill, 2) and milling process (roller mill, 3). bricks or mechanically compressed into forms ensure optimal consistency. After this time, Water and sand – and for hollow bricks, pore- with automatic soft mud presses. The soft the clay is collected and transported to the forming agents like sawdust – are added (4) “green” bricks are stacked on palettes and nearby plant by conveyor belts or trucks for and mixed to achieve the right consistency. transferred to the dryer. Clay roof tiles are further processing. The clay is next transported to a storage area extruded, or pressed into forms and made into Wienerberger is committed to restoring former (mud house, 5) by conveyor belts, and from moulded tiles. clay mining sites. Clay pits that are no longer here fed through rotary disk feeders (6) into Our own die manufacturing allows us to used are returned to serve as a habitat for flora the extruder (7). develop die forms, which represent the basis and fauna or create a natural recreation area Technical progress now makes it possible for for innovative products with new shapes and for local residents, or are restored for use by us to use lower quality clay that was formerly configurations as well as optimized product agriculture or forestry businesses. discarded as residue. The use of biogenic, features. renewable materials such as sunflower seed shells or hay and secondary raw materials like paper fiber improves environmental compatibility and reduces costs.

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3 4 5 6

9 10 11

Drying (8) Firing (9) Packaging (10) The drying process removes the moisture The firing of the brick in the tunnel kiln at a The fired bricks are automatically loaded onto from the soft “green” bricks, and prepares the temperature of 900 to 1200°C is the final part pallets, and covered with strips and films. This bricks for firing. Depending on the type of the of the production process, and lasts between packaging identifies the bricks and makes them product and the production technology, the 6 and 36 hours. This process gives the bricks safe for shipping. drying period takes between 4 and 45 hours. a permanent strength. The pulp and sawdust The use of thinner films made of recycled During this process the moisture content drops (pore-forming agents) that were added to PE and an increase in the life cycle of palettes from 20% to less than 2%. After drying the hollow bricks during preparation burn out reduces the amount of packaging material bricks are automatically repackaged into a firing completely and leave tiny holes that improve required. setting and transferred to the kiln by kiln cars. thermal insulation. Facing bricks and clay roof New and more efficient drying and air stream tiles can also be produced with a ceramic Delivery (11) technologies have significantly reduced the surface (engobe or glazed), which is burned in Wienerberger has a network of decentralized drying period. This lowers energy consumption, and creates a particularly attractive surface. production facilities. The plants are located improves product quality and makes it possible After firing, bricks are nonflammable and near to raw material supplies and as close as to develop new products. fire-safe for ever. possible to local markets. This reduces transport Specially developed kiln and firing technolo- distances, which makes fast delivery possible gies as well as air stream systems have reduced and also lowers the environmental impact. the required firing time by up to two-thirds. This has created enormous advantages: a 50% decrease in the use of primary energy over the past ten years, up to 90% less emissions through thermal post-combustion equipment, optimized product quality and a substantial increase in capacity.

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Our goal is to create Wienerberger views business as an integral part of society. Its duty is to serve people and create sustainable values with value for all. Wienerberger takes its role as a responsible member of society seriously and acts in natural products accordance with economic, ecological and social principles. Our goal is to create sustainable values with natural products.

With the signing of a social charter in 2001, the management of Wienerberger formally confirmed its intention to comply with the recommendations of the International Labor Organi- zation (ILO) in Geneva and to follow the principles of social progress. As a logical consequence of this action, Wienerberger also joined the UN Global Compact in 2003. This initiative was started in 1999 by the United Nations to promote good corporate citizenship. The UN Global Compact now comprises ten major principles from the areas of human rights, labor standards, environmental protection and measures to combat corruption. Companies that join this project agree to voluntarily comply with the principles of the UN Global Compact, which can be reviewed under www.unglobalcompact.org.

Sustainability anchored In 2004 Wienerberger management carried out an intensive dialogue on the subject of sustain- in Wienerberger ability with the support of external consultants. It showed that sustainability is not just a slogan mission statement for Wienerberger, and also confirmed our long-standing focus on economic, ecological and social principles. The results of this workshop formed the basis for the development of our new Wienerberger mission statement, which is now available in 18 languages and was presented to our employees in 2005. In order to play a key role in the development of a “sustainable future” we have defined sustainability as our foremost goal. The two most important guidelines to help us achieve this objective are active protection of the environment and social responsibility.

Active protection of the environment All local companies are “Building Value for a sustainable future” is one of our guiding principles, and our many activ- working to improve ities demonstrate that these are not just empty words. As a producer of bricks, Wienerberger “uses” environmental protection nature in a kind of symbiosis: our clay mining procedures are designed to minimize the impact on the environment, and our bricks and roof tiles are ecologically friendly, natural products with a long service life that can be easily be recycled. All companies in the Group work continuously to improve environmental protection measures and optimize the use of energy.

Specially designed activities For example, our French subsidiary prepared a policy statement that can be applied to the and cooperation with NGOs entire Wienerberger Group. These principles underscore the commitment of the company to compliance with environmental protection laws, climate protection, energy savings, the restoration of clay mining sites, recycling of waste, exchange of experience with other companies, humanitarian assistance, support for local communities, preservation of our cultural heritage and transparency. At our plants we work to maintain the best possible understanding with municipal authorities, representatives of interest groups and neighboring residents. The focus of our activities is placed on mutual understanding and learning from one another. We also value an open and continuous dialogue with NGOs.

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A special cooperation has linked us with the World Wide Fund for Nature (WWF) for the past Exemplary cooperation four years since the signing of a letter of intent for the pursuit of joint projects. Within the frame- with WWF on specific projects work of this agreement Wienerberger supports the international activities of the WWF in Austria, which include the Ramsar Center in Schrems, a documentation, event and research facility on wetlands, as well as the WWF-Seewinkelhof in Apetlon. In exchange the WWF advises Wiener- berger on the realization of environmental protection projects.

Social responsibility In keeping with our focus on people, social engagement and support for the needy form a Projects for social cornerstone of our social responsibility.Wienerberger works to provide its employees with an attrac- working environment adapted to meet needs tive and social working environment through training programs, the improvement of working of local employees conditions, voluntary benefits and support for common activities. Questionnaires and feedback cycles form the basis for an active dialogue with employees, and help to define their particular needs. This leads to the development of country-specific measures that reflect the requirements of the local workforce. For example, working hours in Austria were made more flexible during the past year to offer employees a greater opportunity for self-determination. In Ukraine, Wienerberger voluntarily provides its employees with health insurance to give them added security.

“Wienerberger makes bricks, but homes are built for people”. This awareness is reflected in Support for charitable our goal to use our products and financial support as a means of helping people who have been organizations with special focus on assistance for hurt by unforeseen circumstances or misfortune. Our most important concern in this respect is to children help children, the weakest members of our society. We work together with recognized organizations, which we support by providing free bricks for the construction of educational facilities and buildings as well as financial backing for their projects. A long-standing partnership connects us with SOS-Kinderdorf, and we have steadily intensified this contact through numerous projects on different continents in recent years. With the founding of the SOS-Sustainability Foundation – special funds reserved for Asia, which are invested under professional management and will continue to grow over the years – we have found an instrument that will guarantee long-term assistance for the victims of the Tsunami.

We regularly support social projects in nearly all countries in which Wienerberger is present. Selected projects shown The following two pages present a selection of the sustainability projects that our local subsidiaries on following pages carried out during the past year.

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Environmental Protection

Installation of air pollution controls in 8 tunnel kilns USA General Shale, the US subsidiary of Wienerberger, successfully completed the installation of air pollution controls in eight large tunnel kilns during the past year. This € 7.5 million investment represents an important step in reducing emissions by the American brick plants, and underscores the role of General Shale as a leader in 100% recycling of environmental issues for the US brick industry. production waste Romania A project was started during September 2006 to support the recycling of all waste arising in connection with the € 4 million for production process. In particular, this involves waste paper and plastic, iron scrap, batteries, environmentally compatible residual oil and tires. To ensure the success of production technology the project, the waste removal and recycling firms that work with the company are also Germany Over the past two years, Wienerberger has carried out an involved. This project is currently in the first extensive € 4 million program to modernize the brick plant in Ansbach. phase of implementation, which covers the This project optimized the production process with the use of new recycling of waste paper and plastic. technology, and thereby led to a reduction in energy requirements and increase in environmental compatibility. It also improved the kiln-to-dryer heat transfer which, in turn, further decreased the amount of energy used in the production process. The installation of modern thermal post- combustion at this plant has made an important contribution to reducing the emissions from brick production to a level that is far below legal limits. Sleeping places made € of bricks for bats 1 million to Great Britain The Cheshire Wildlife Trust approached reduce emissions Wienerberger for assistance with the construction of sleeping areas for bats in its nature protection park. Special Czech Republic In 2006 Wienerberger invested roughly brick boxes were developed together with experts and € 1 million to install more environmentally friendly produced by Wienerberger, and now provide optimal production technologies in its Czech facilities. Three plants sleeping places for these animals. Although the project were refitted with thermal post-combustion equipment, was originally designed for the Cheshire Wildlife Trust, it which reduced emissions from the production process by up has become a huge success and drawn the interest of to 1/10 of the original level. other English nature protection parks that are interested in installing these “bat boxes” throughout the country.

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Jövövár (castle of the future) Initiative Hungary The Jövövár Initiative, which was founded by Wienerberger in 2000, has received increasing attention and broad support from industry and the Hungarian media in recent years. Alone in the past year, five additional companies joined this program. Roughly € 1 million has been collected since the start of the Jövövár Initiative to finance projects that assist children and young people. Under the auspices of the Hungarian minister of educa- Preservation of the tion, more than € 200,000 of funds and donations in kind were distributed during 2006 to institutions that are active in the education, upbringing, medical care or rehabilitation of national heritage children. Our bricks were used, among others, to renovate schoolrooms, build gymnasiums Netherlands In cooperation with the and repair damaged roofs. municipal authorities of a small medieval town in the Netherlands, a project was started to renovate the wall surrounding the city. Wienerberger developed and produced special bricks for this project. They not only harmo- Construction of a nize with the existing design and maintain the school area for the medieval cityscape, but also contain iron to increase the load-bearing capacity and thereby Happy Kids Foundation give the wall the required strength. Work on Romania The Happy Kids Foundation plans to construct the project began during 2006 and should be a modern school area that will also be available for use by the local completed by mid-2007. community. It will include a day nursery, day care center, grammar school and high schools as well as various recreational facilities like sports fields and cafeterias. This project is designed to support the education of children with special needs as well as children from rural areas. Wienerberger has agreed to donate all bricks required for construction of these facilities. The project was started in October 2006 and is scheduled for completion in 2012.

Christmas donation for children Austria As in the past years, Wienerberger has dedicated its annual Christmas donation to projects that help needy children. The Concordia project managed by Father Sporschill received € 37,500 for a children’s house in its Social “City of Children” in Pirita, Republic of Moldavia. This house has made it possible to place 18 abandoned children with a new family. A further € 37,500 was donated to SOS Kinderdorf for a project in Byelorussia. As part of a program to strengthen families, the SOS social center Respon- in Minsk provides psychological and medical support for people affected by crises and, in particular, offers financial sibility assistance to single mothers.

53 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Employees

Employees The Wienerberger Group employed an average workforce of 13,639 in Europe and the USA by Segment during 2006, compared to 13,327 in the previous year. This increase of roughly 2% resulted from 5 acquisitions and new plant construction in North and Central-West Europe as well as in the USA. 4 Revenues per employee rose by 11%, and productivity (EBITDA per employee) grew 8% over the 1 prior year level. 3 2 Professional personnel development and the advancement of human capital represent key factors for the success of our Company. In keeping with our decentralized structure, human 1 Central-East Europe 34% resource management is the responsibility of our local companies. However, the personnel policies 2 Central-West Europe 16% for key executives are coordinated centrally. These actions concentrate on the identification and 3 North-West Europe 31% 4 USA 18% support of future managers, the preparation of talented men and women for management positions 5 Investments and Other 1% and the introduction of new management techniques for top executives.

Entrepreneurial spirit Development In order to increase motivation and strengthen identification with the success of our Company, of Productivity management receives a fixed salary as well as a variable component that is based on earnings in TEUR 180 indicators and qualitative criteria and averages roughly one-fourth of total remuneration. An important factor for the focus of management on shareholder value is our stock option plan, which covers 163.1 160 72 key employees. The terms of this plan are explained on page 124 of the notes to the financial 146.7 144.7 statements. 120 Responsibility 80 Following the successful introduction of the Wienerberger mission statement in 2005, the operating companies presented their country-wide implementation steps at our management 34.6 33.4 32.1 40 conference. These many different measures covered a broad spectrum of ideas on the subject of sustainability. The Netherlands was particularly impressive with exemplary projects in the areas of 0 work safety, medical services, sponsoring and a social annual report. As recognition for this special 2004 2005 2006 commitment, the company was presented with the Wienerberger Sustainability Award. Revenues / Employee EBITDA / Employee Wienerberger set a further milestone with its Safety, Health & Education (SHE) reporting system, which was introduced during the past year.This database will collect and store key indicators on the make-up of the workforce as well as work safety and training, and allow us to take specific steps for improvement if necessary.

Diversity We respect other Activities in the area of human resources focused on a training offensive in 2006. Each countries and cultures, employee in the holding company took part in two workshops, which covered technical skills and learn from each other as well as networking and the exchange of knowledge in the Group. This project was not only designed as a continuing education program for our employees, but also as a means of distributing the multi-cultural and widely diversified know-how that is available throughout the Wienerberger Group.

54 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Employees Review of Operations Segments Financial Statements Service

The human touch The Ambassador Program was introduced by Wienerberger in 2004 to develop the managers We provide specialized of the future. It provides talented men and women with training in the form of modular seminars training and support for our employees that cover specialized know-how, social skills and system capabilities. The graduates then return to serve as ambassadors in our subsidiaries, and spread their newly acquired know-how and the Wienerberger spirit throughout the Group. The Ambassador Program has been a great success in recent years, and a new cycle is therefore planned for 2007.

Passion We place people at the focus of our activities and identify with our products and our We identify with our Company. In order to communicate this Wienerberger spirit to our new employees, we hold intro- products and company ductory meetings with plant tours, product presentations and discussions to make the Company and its products come alive.

Quality The Wienerberger Engineering Academy was established as a permanent facility to provide We promote the instruction in various technical disciplines as well as social and management skills, and thereby international exchange of know-how support the internal development of specialists to safeguard the long-term success of our Company. This two-year program focuses not only on social skills, but above all on ceramic products and production technologies. The know-how compiled by our international experts in the areas of raw material testing, preparation, drying and firing technology and quality analysis is passed on to our technical personnel. The goal of this program is to safeguard and increase our competitive advantage in engineering over the long-term. Next year we plan to expand the Wienerberger Academy to also include a modular course for plant managers.

Dynamics In order to strengthen the ties between our employees and the Company, we are currently We react in a flexible working to increase the flexibility of working hours to meet social trends and also give employees manner to changing market conditions greater responsibility. As a first step, we have concluded a new employment agreement for the employees of the holding company that makes working hours more flexible.

The further development of the Wienerberger corporate culture and the identification of all Visit our job center employees with these common values is a central objective of our mission statement. Wienerberger (Jobs & Careers) under www.wienerberger.com is dedicated to the principles of sustainability, multi-cultural diversity, decentralized responsibility and entrepreneurial beliefs. People are the focus of our efforts, and our personnel policies are based on this conviction.

55 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 REVIEW OF OPERATIONS

Highlights 2006

January 12 February 22 April 27 May 19 Wienerberger Wienerberger expands capacity in USA Wienerberger purchases Wienerberger takes major declares support for General Shale, the US subsidiary of the Bayerische Dachziegelwerke expansion step in the western USA amended Corporate world's largest brick producer Wienerberger, Bogen GmbH Wienerberger acquires Robinson Governance Code continues its expansion with the addition Wienerberger acquires Bayerische Brick Company, a brick producer and Wienerberger AG welcomes of another production line to its plant in Dachziegelwerke Bogen GmbH, merchant with headquarters in Denver, the newly announced Mooresville, Indiana. a family company with head- Colorado, and expands into the western Austrian Corporate quarters and production near region of the USA. Governance Code, which March 28 Straubing (ca. 130 km northeast was adapted to reflect Wienerberger announces of Munich). June 1 EU recommendations for solid final results for 2005 Wienerberger purchases facing corporate governance. Wienerberger recorded further improvement brick plants in Germany in revenues and earnings during the 2005 Wienerberger continues to grow and Business Year in spite of a difficult market signs a contract through its Germany climate. Group revenues rose by 11% to subsidiary, Wienerberger Ziegelindustrie € 1,954.6 million and operating EBITDA GmbH, to purchase the facing brick by 6% to € 428.4 million. plants in Hude near Bremen from Friedrich Knabe Kirchkimmen Ziegelei GmbH & Co. KG. solid final results expansioncorporatepurchases rec investmentsstructu optimistic

February 2 April 6 May 3 July 28 Wienerberger continues Wienerberger subsidiary Wienerberger optimistic for Wienerberger takes next expansion in Poland Semmelrock continues investments 2006 after first quarter results step in Germany Wienerberger acquires the in Eastern Europe Wienerberger again confirms the Wienerberger remains on its growth Cermegad and Zeslawice brick Semmelrock, a 75% subsidiary of success of its profitable growth course, and acquires the assets of the plants from Ploegsteert Inter- Wienerberger AG and the market leader strategy with results for the first south German clay roof tile producer national N.V. and Vander- for high-quality concrete pavers in quarter. Despite an extremely severe Jungmeier GmbH & Co. KG with sanden Steenfabrieken N.V. Central-East Europe, continues its expan- winter in large parts of Europe, headquarters and production in sion in 2006 with the full takeover of Group revenues rose by 15% to Straubing (ca. 130 km northeast of February 9 the Kombet plant in Northern Poland. € 383.9 million and EBITDA grew Munich). Wienerberger enters by 2% to € 55.6 million. Bulgaria April 25 Wienerberger starts the new Wienerberger acquires May 9 August 16 year with an important Eichhorn brick business in Austria Wienerberger expands Change in Wienerberger strategic expansion step in Wienerberger Ziegelindustrie GmbH, the direct sales in US shareholder structure Bulgaria and acquires over Austrian subsidiary of the world's largest General Shale, the US subsidiary Capital Research and Management 90% of the shares in Uspeh brick producer, acquires a hollow brick of the world's largest brick producer announced that it held a total of AD, which operates a brick plant in Blindenmarkt, Lower Austria, from Wienerberger, acquires Curley 3,770,489 shares, or 5.08% of the plant in Lukovit, 120 km Eichhorn GmbH. The facility has a total Building Material Inc., a masonry outstanding share capital of northeast of Sofia. capacity of 60 million brick units. supplier in Carmel, Indiana. Wienerberger AG, as of August 11, 2006.

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August 17 September 26 October 23 December 7 Wienerberger announces Wienerberger Annual Report Hans Tschuden appointed new New Wienerberger CFO: recommended cash offer for 2005 receives numerous CFO of Telekom Austria AG Willy Van Riet Baggeridge (inter)national awards Hans Tschuden was appointed In a meeting on December 6, the Wienerberger plans to acquire The Wienerberger Annual Report Chief Financial Officer of Telekom Supervisory Board appointed Willy Baggeridge Brick PLC, the fourth 2005 receives Grand Awards for Austria as of April 1, 2007 and Van Riet, former Managing Director largest brick producer in Great Britain, “Financial Data” and “Written will therefore resign from the of Wienerberger activities in Great at a purchase price of £ 89.2 million Text” at the ARC (the Oscar for Managing Board of Wienerberger AG Britain, as the new Chief Financial for 100% of share capital, subject to annual reports) in New York and on March 31, 2007. Officer of Wienerberger AG. the approval of the UK Competition is also rated the fifth best annual Commission. report in the world by e.com in its November 8 December 11 “Annual Report on Annual Wienerberger reports significant OFT refers Baggeridge Reports”. The Austrian business earnings growth in third quarter acquisition by Wienerberger to journal “trend” ranks Wienerberger The third quarter of 2006 confirms the UK Competition Commission as the best annual report in success of efforts by Wienerberger AG Wienerberger and Baggeridge note Austria for 2005. to improve results. Revenues and today’s announcement by the Office EBITDA both rose by 18% between of Fair Trading (OFT) that it intends July and September. to refer the proposed acquisition of Baggeridge by Wienerberger to the British Competition Commission. ommendedacquisition n awardsearning re20th anniversary new plantsdonates

August 22 Wienerberger accelerates growth November 23 during the first half of 2006 Two new Wienerberger Wienerberger continues its profitable October 6 plants in France growth course during the first Semmelrock acquires Czech Wienerberger continues its expansion half of 2006 and sets a new record concrete paver producer on the French market with the for revenues, which rose by 10% to Semmelrock, a 75% subsidiary of purchase of more than 50% of the € 1,011.9 million. However, this Wienerberger AG, continues its expan- shares in Briqueterie Bar Frères and positive development will only have an sion in Central-Eastern Europe by the start-up of a hollow brick plant impact on earnings at a later date. acquiring Colorbeton a.s., the third in Angervilliers. December 14 largest producer of concrete pavers in Wienerberger donates € 75,000 September 19 the Czech Republic. November 28 Wienerberger invites clients and busi- Change in Wienerberger Wienerberger acquires German ness partners as well as high-ranking shareholder structure October 11 clay paver producer Penter representatives of politics, business and Lansdowne Partners Limited Wienerberger marks 20th Wienerberger becomes the leader industry to its traditional Christmas announced that it held a total of anniversary in Germany on the German clay paver market cocktail and donates € 37,500 each to 3,753,321 shares, or 5.06% Wienerberger started its internation- with the acquisition of the second the Concordia Project, which builds of the outstanding share capital alization 20 years ago with market largest company in this segment, homes for abandoned children, of Wienerberger AG, as of entry into Germany through the Penter Klinker Klostermeyer KG in and to the SOS-Children Villages in September 11, 2006. takeover of the Oltmanns Group. Lower Saxony. Byelorussia.

57 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 The Economy

EU growth and global The global economy was characterized by strong development in 2006. China continued its economy at solid level rapid advancement with real GDP growth of 9.7%, while exports served as the major driver in Japan and supported a GDP increase of 2.7%. In the USA (+3.4%) the pace of growth slowed somewhat, above all due to a sharp rise in the oil price and a decline in residential construction. In Europe economic recovery gained strength. The EU-15 recorded a plus of 2.2% as a result of higher exports and increased domestic demand. The EU-15 average of 2.6% GDP growth was not reached by Germany (+1.7%), Italy (+1.3%) and France (+1.9%). However, significantly better development was reported by Sweden (+3.4%), Finland (+3.6%), Belgium (+2.3%), Great Britain (+3.5%), the Netherlands (+2.6%), Denmark (+3.2%) and Spain (+3.1%). Austria recorded the highest rate of growth since 2000 with an increase of 2.5%. The above-average inflation rates – a result of higher energy prices – led to a series of interest rate hikes by the European Central Bank.

Development in Eastern The CEE countries also continued to record strong growth in 2006. This development was Europe still clearly supported by the increasingly important role of this region in international trade and high foreign outpaces Western Europe direct investments. In addition, the EU accession of Bulgaria and Romania in 2007 had a positive impact. Significant GDP growth was registered by the Baltic States of Latvia (+11.0%), Estonia (+10.9%) and Lithuania (+7.8%). High GDP increases were also reported by Slovakia (+6.7%), the Czech Republic (+6.0%), Poland (+5.2%) and Hungary (+4.0%).

Housing Starts 2006 per 1,000 Residents Source: Euroconstruct December 2006, U.S. Census Bureau

8 7.05 6.24

5.99 6 5.30 5.06 4.58 3.97 3.95 3.72 4 3.28 2.76 2.21 2

0 F Ø Western USA B A NL 1) HUN CZ UK PL 1) GER 1) SK Europe

1) Housing completions; starts are not reported from these countries

New residential The European construction industry recorded a faster pace of growth than in previous years. construction in Europe In Western Europe housing starts per thousand residents rose from an average of 5.69 in 2005 to stronger in 2006 6.24 for 2006. This positive trend was supported primarily by developments in France, Belgium, Great Britain and Germany. The level of housing completions in Germany improved during the reporting year but still remained at a low 2.76, which is less than half the average. Great Britain also fell clearly below the average for Western Europe with 3.72. In contrast, Spain with 18.21 and Ireland with 21.25 housing starts per thousand residents again recorded extremely high values. In Eastern Europe the significance of new residential construction has risen steadily over recent years, but the level still lies clearly below Western Europe. The most developed countries in 2006 were Hungary with 3.97 housing starts per thousand residents and the Czech Republic with 3.95. For the future Wienerberger sees substantial opportunities in Poland (currently 3.28), Romania (1.5), Bulgaria (1.0) and, due to the size of the market, also in Russia.

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The decisive factors for the recovery of the European construction industry were the increasing Growing confidence in migration to city centers and a trend to smaller housing units. The Construction Confidence Index the European construction sector during 2006 (CCI), an indicator of expected developments in this industry, has included a strong positive outlook for Germany, the largest construction market in Europe, since 2005. New residential construction in Germany also profited in 2006 from the final cut of the homebuilders’ allowance and anticipated purchases before the VAT increase in 2007.Confidence in the construction industry has remained at a high level in France since 2003, and a slight upward trend was also noted in Great Britain during the past year. Additional positive impulses were provided by the new EU member states in Eastern Europe.

European Construction Confidence Indexes Source: Datastream

-20 EU

Germany -40 France

-60 Great Britain 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

The development of the US economy in 2006 failed to match the prior year level. GDP Moderate growth in growth declined to +3.4%, but again exceeded the EU-15 (2.2%) by a substantial amount. Higher US-GDP and slump in housing starts energy prices and a further increase in interest rates by the US Federal Reserve caused negative effects. The US dollar declined in value against the euro because of the weaker economy and subsiding danger of inflation, but generally stabilized toward the year-end because of an improvement in the balance of trade. The slump on the US real estate market had a negative impact on both consumer spending and building and, in turn, triggered a sharp drop in new residential construction, which had served as a strong driver for the US economy in recent years. Housing starts totaled only 1.8 million units in 2006 (or 5.99 per 1,000 residents), which represents a decrease of 13% compared to 2005. Experts believe that new residential construction will remain weak at least until the middle of 2007.

US Housing Starts in 1,000 per Month Source: U.S. Census Bureau

2,500

2,000

1,500

1,000

500 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

59 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Financial Review

Earnings Revenues by Region The Wienerberger Group met its growth targets in 2006 due to the excellent development

7 of business during the second half-year and sound demand in Europe. In spite of a strong

1 market decline in the USA and a significant rise in energy costs, Group EBITDA rose by 10% to

6 € 471.9 million.

5 2

4 3 Group revenues increased 14% to € 2,225.0 million, whereby € 75.9 million of this amount was generated by the initial consolidation of the Robinson Brick Company in the USA, the inte-

1 Eastern Europe 24% gration of the Biegonice Group in Poland and Colorbeton in the Czech Republic as well as the 2 Benelux 20% acquisition of a brick plant in Belgium and a clay roof tile plant in Germany. After adjustment for 3 Germany 14% 4 France 7% these acquisitions and foreign exchange effects, organic growth totaled 10%. It was driven primarily 5 Austria 4% by higher sales volumes in Europe, but also includes the takeovers of Jungmeier Dachziegelwerke, 6 Other Europe 15% Knabe facing bricks and Penter clay pavers in Germany in the form of asset deals. The 14% growth 7 USA 16% in revenues resulted from a plus of 10% in sales volumes and 4% of price increases. Higher sales volumes were recorded in all product groups and regions in Europe. Wienerberger was only faced with lower sales volumes in the USA, where new residential construction declined by a strong 13% year-on-year. Positive foreign exchange effects, above all from the Polish zloty and Czech koruna, offset the negative effects from a weaker US dollar and Hungarian forint.

Revenues by Segment In Central-East Europe, all markets reported higher revenues from brick activities. This development was driven by strong demand and, in particular, by two-digit growth in Poland, 5 Romania, Slovakia and Bulgaria. Hungary also recorded a substantial increase in sales volumes 4 1 compared to 2005. The Semmelrock Group (concrete pavers) and Bramac (concrete roof tile joint venture) contributed to the positive development of this segment with two-digit increases in sales 3 2 volumes, which were also based on the expansion of business in Eastern Europe.

1 Central-East Europe 28% In Central-West Europe revenue growth was supported by the recovery of residential construc- 2 Central-West Europe 21% tion in Germany. The noticeable rise in construction activity on this market led to higher sales 3 North-West Europe 37% volumes and revenues in all product segments, in particular beginning with the second half of the 4 USA 16% 5 Investments and Other -2% year. Positive effects were also provided by the initial consolidation of the Jungmeier and Bogen clay roof tile businesses in Bavaria, which were acquired at mid-year, as well as the Knabe facing brick activities and Penter clay pavers. Wienerberger brick activities in Switzerland recorded continued growth during the reporting year, but Italy registered another slight decline from a high level.

North-West Europe recorded satisfactory growth in revenues, which was supported by steady and sound demand in France and Belgium as well as higher sales volumes in Great Britain, Scandinavia and the Baltic States. Revenues also improved in the Netherlands, above all due to an increase in sales volumes and price adjustments in the clay roof tile area. The decline in US residential construction triggered a drop in sales volumes for the Wienerberger subsidiary General Shale, which was only offset in part by the Robinson acquisition. In total, US revenues in euros were 4% higher than in the previous year, even though sales volumes – including Robinson – declined by 8%.

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Group EBITDA rose by 10% to € 471.9 million, primarily as a result of higher sales volumes. Higher EBITDA due The EBITDA margin declined from 21.9% to 21.2%. Energy costs rose by a total of € 65.6 million to substantial growth in sales volumes to € 316.0 million for the reporting year and equaled 14.2% of revenues for 2006, compared with 12.8% in the previous year. Roughly € 47 million of this increase resulted from higher energy prices, while the remainder represents volume increases in production. In addition, the increase in energy costs also led to higher prices for other materials and services.

In Central-East Europe, revenue growth also led to a strong improvement of 16% in EBITDA Significant EBITDA to € 158.1 million. Higher earnings were recorded in Poland, Hungary, Romania, Austria and improvement by all segments in Europe, Slovenia as well as by Bramac and Semmelrock, while the Czech Republic and Slovakia were faced decline in the USA with a slight decline from the record prior year level. In Central-West Europe EBITDA rose by 23% to € 96.1 million, in particular due to the turnaround in the German clay roof tile business, acquisitions and market growth. In Italy lower demand and the start-up of new production capacity by competitors led to a decrease in sales volumes and earnings, while Switzerland again recorded an improvement over the good 2005 results. In North-West Europe EBITDA increased 8% to € 177.7 million, chiefly as a result of higher earnings in Belgium, the Netherlands, France and Great Britain.

In the USA a sharp drop in the demand for bricks led to a decline in earnings. However, the Robinson acquisition impact of this development was moderated by the optimization of production costs with the partly offsets market decline in the USA shutdown of two smaller plants as well as higher sales prices and the initial consolidation of Robinson Brick. In total, EBITDA recorded by this segment decreased by 5% to € 63.4 million. Holding company costs, which are included in the Investments and Other segment, increased during the reporting year as a result of the Group’s expansion, and were not fully offset by the proceeds from the sale of the stove tile business.

Earnings Development 2005 Disposals 1) Purchases 1) F/X 2) Organic 2006 High organic growth in Europe despite further in € mill. in € mill. in € mill. in € mill. in € mill. in € mill. rise in energy costs Revenues 1,954.6 0.0 78.5 1.8 190.1 2,225.0 Operating EBITDA 428.4 0.0 8.6 1.0 33.9 471.9 Operating EBIT 270.3 0.0 4.5 0.7 24.1 299.6 Non-recurring items -0.7 0.0 0.0 -0.1 -1.3 -2.1 Financial results 3) -18.3 0.0 -3.8 0.0 1.9 -20.2 Profit before tax 251.3 0.0 0.4 2.4 23.2 277.3 Profit after tax 196.4 0.0 0.5 2.2 19.2 218.3

1) Effects of companies acquired or sold (changes in the consolidation range) 2) Foreign exchange differences 3) Including income from investments in associates

61 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Non-recurring income The € 8.6 million increase in EBITDA from changes in the consolidation range was supported and expenses nearly by organic growth of € 33.9 million as well as € 1.0 million of positive foreign exchange effects. balanced Wienerberger closed two plants in the USA and one in the Czech Republic during 2006. These measures led to non-recurring expenses of € 7.1 million, which were comprised of € 0.4 million cash out and € 6.7 million in write-offs. In keeping with our strategy to divest non-operating real estate, we sold a property in the south of Vienna for € 5.9 million in 2006. The resulting book gain of € 5.1 million largely offset the above-mentioned restructuring costs. In order to improve transparency, non-recurring income and expenses are shown below operating EBIT on the income statement.

EBITDA +10% to Operating EBITDA 1) 2005 2006 Change € 471.9 million in € mill. in € mill. in % Central-East Europe 136.7 158.1 +16 Central-West Europe 78.0 96.1 +23 North-West Europe 165.3 177.7 +8 USA 66.4 63.4 -5 Investments and Other 2) -18.0 -23.4 -30 Wienerberger Group 428.4 471.9 +10

1) Adjusted for non-recurring income and expenses 2) Including holding company costs

Operating depreciation in relation to revenues equaled 7.7% for the reporting year, which is slightly less than the prior year level of 8.1%. This value, which is still high in international comparison, resulted from the strong pace of our investment activity in recent years. It is also an indicator of the capital-intensive nature of our business and the technical potential of the Wienerberger Group. The € 3.5 million of impairment charges that were recognized to goodwill in 2006 involved goodwill from the acquisition of the Optiroc Group in Denmark and Norway during 2001. The annual impairment test of these assets indicated a need for a write-down because of substantial cost increases and reduced margin expectations.

Operating profit rose by 11% to € 299.6 million despite the high level of capital expenditure in recent years and a subsequent increase in depreciation. The average number of employees increased 2% to 13,639 as a result of acquisitions and new plant construction.

Decline in EBITDA margin Profitability Ratios 2005 2006 from 21.9% to 21.2% in % in % Gross profit on revenues 38.0 36.9 Administrative expenses to revenues 5.6 5.8 Selling expenses to revenues 18.9 18.4 Operating EBITDA margin 21.9 21.2 Operating EBIT margin 13.8 13.5

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Income Statement 2005 2006 Change

in € mill. in € mill. in % Revenues 1,954.6 2,225.0 +14 Cost of goods sold -1,211.0 -1,403.7 -16 Selling and administrative expenses 1) -479.3 -539.2 -12 Other operating expenses -25.6 -33.3 -30 Other operating income 31.6 54.3 +72 Amortization of goodwill 0.0 -3.5 >100 Operating EBIT 270.3 299.6 +11 Non-recurring results -0.7 -2.1 >100 Operating profit (EBIT) 269.6 297.5 +10 Financial results 2) -18.3 -20.2 -10 Profit before tax 251.3 277.3 +10 Taxes -54.8 -59.0 -8 Profit after tax 196.4 218.3 +11 Earnings per Share in € 1) Including freight costs 3.02

2) Including income from investments in associates 2.95 3.0 2.67 2.66 2.54 2.54 Financial results declined 10% to € -20.2 million because of higher interest expense and lower 2.5 earnings from Tondach Gleinstätten, which is valued at equity. In the previous year, results reported 2.0 by this company were positively influenced by non-recurring effects. The interest cover (ratio of EBIT to net financing costs) equaled 6.2 and exactly matched the prior year level. The tax rate 1.5 decreased slightly from 21.8% in 2005 to 21.3% for 2006, and is expected to range from 21 to 22% during the coming years. 1.0

0.5 Profit after tax rose by 11% to € 218.3 million. This development was supported by significantly higher prices and sales volumes in the operating business as well as a near offset between 0.0 2004 2005 2006 non-recurring income and expenses and only a slight decline in financial results despite the higher level of debt. Based on the weighted number of shares outstanding in 2006, or 73.3 million shares IFRS (2005: 73.2 mill.), earnings per share equaled € 2.95 (2005: € 2.66). Adjusted

Asset and Financial Position The balance sheet total rose by 12% over the prior year to € 3,674.3 million, mainly as a result Acquisitions and higher of the Group’s growth investments and acquisition-based increases in inventories and receivables. inventories raise balance sheet total The balance sheet structure of the Wienerberger Group is typically for the industry and characterized by a high fixed asset component and long-term financing.

Fixed and financial assets increased to 69% (2005: 68%) of total assets. Tangible fixed assets Growth in inventories exceeded the prior year level by € 205.3 million and comprised 66% of capital employed. Inven- only due to acquisitions tories as shown on the balance sheet totaled € 509.8 million (2005: € 445.9 mill.). The increase in inventories resulted primarily from acquisitions but also from the difficult market conditions in the USA, while stocks in Eastern Europe were very low at year-end. The turnover of trade receivables rose from 34 to 36 days in part because of the strong growth in revenues during the fourth quarter. The average turnover of trade payables increased from 28 to 33 days. Working capital (inventories

63 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 + trade receivables – trade payables) declined in relation to the volume of business, and equaled 20% (2005: 21%) of capital employed with a turnover of 87 days (2005: 90 days). Liquidity, which is comprised of cash, deposits with banks and securities, declined by 4% to € 233.5 million as result of lower bank balances.

Development of balance sheet structure in € billion

Assets Inventories Fixed and financial assets 69% 14% Other assets 17% 2006 3.67

2005 3.27 68% 14% 18%

Equity and Liabilities 45% 36% 8% 11% 2005 3.27

2006 3.67 Equity and minority interest 43% Financial liabilities 38%Provisions Other 8% liabilities 11%

Increase in equity Group equity including minority interest rose by 7% to € 1,591.4 million (2005: € 1,483.1 mill.). supported by higher This growth was the result of higher net profit of € 218.3 million, which was contrasted by a earnings despite negative foreign exchange effects dividend payment of € 86.4 million by Wienerberger AG and negative foreign exchange differences of € 17.2 million (after an adjustment for the effects of hedging instruments) as well as net cash outflows of € 1.4 million for the share buyback program and changes in minority interest of € 5.0 million. Investments made during the reporting year were financed by current cash flow and additional debt. The equity ratio (including minority interest) declined from 45% to 43%. As of the balance sheet date, equity covered 63% of fixed and financial assets.

Investments and higher Non-current provisions increased 3% to € 241.7 million, primarily as the result of higher provi- working capital lead to sions for deferred taxes and guarantees. Current provisions rose by 18% to € 46.4 million, above increase in financial liabilities all due to acquisitions. Non-current and current provisions remained unchanged at 8% of the balance sheet total. The provisions for deferred taxes rose 5% to € 110.6 million because of higher additions. The provisions for pensions of € 55.0 million were less than in 2005 because of foreign exchange effects and reversals, and are of subordinate importance for the long-term financing of the Wienerberger Group. Interest-bearing loans (financial liabilities) increased € 215.5 million to € 1,404.7 million, and include € 1,386.6 million due to banks and bondholders as well as leasing liabilities of € 16.2 million and Group liabilities of € 1.9 million. These liabilities are contrasted by cash, bank deposits and securities of € 233.5 million. Of the € 1,386.6 million in liabilities due to banks and bondholders, 57% (2005: 92%) are long-term and 43% (2005: 8%) are short-term in nature. Wienerberger again significantly increased the long-term component of financing by issuing a € 500 million hybrid bond (shown as equity) in February 2007.

64 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Financial Review Segments Financial Statements Service

Calculation of Net Debt 2005 2006 Change

in € mill. in € mill. in % Long-term financial liabilities 1,074.5 790.7 -26 Short-term financial liabilities 89.0 595.9 >100 Financial leases 23.1 16.2 -30 - Intercompany receivables and payables from financing -9.9 -9.5 -4 - Securities -22.4 -40.0 +79 - Cash and cash at bank -219.9 -193.5 -12 Net debt 934.4 1,159.8 +24

Net debt totaled € 1,159.8 million as of December 31, 2006, which is 24% higher than the prior Growth-related increase year value of € 934.4 million. Investments and the dividend payment led to growth of € 530.4 in net debt and gearing million and € 86.4 million, respectively, in net debt. Changes in working capital, foreign currency effects and other items increased net debt by € 8.6 million. Net debt was reduced by € 370.8 million of operating cash flow and € 29.2 million of asset disposals. The combination of these factors raised gearing from 63.0% to 72.9%. Long-term financing such as equity, minority interest, non-current provisions and long-term liabilities covered 106% of fixed and financial assets at year-end 2006 (2005: 128%). The ratio of net debt to EBITDA equaled 2.5, compared to 2.2 in 2005.

Development of Net Debt in € mill. +86.4 +0.0 +8.6 1,159.8 1,200 +530.4 -29.2 1,000 934.4 -370.8

800

600

400

200 Gearing 72.9% Gearing 63.0% 0 Net Debt Gross Total Asset Corporate Capital Working capital Net Debt 31.12.2005 cash flow investments disposals dividend increase and other 31.12.2006

Balance Sheet Development 2005 Disposals 1) Purchases 1) F/X 2) Organic 2006

in € mill. in € mill. in € mill. in € mill. in € mill. in € mill. Fixed and financial assets 1,507.1 0.4 48.0 -10.3 168.0 1,712.4 Intangible assets 563.9 0.1 85.5 -16.4 4.4 637.3 Other non-current assets 222.4 0.0 4.5 0.5 15.9 243.3 Inventories 445.9 1.2 30.3 -3.0 37.8 509.8 Other current assets 530.3 0.5 -142.3 -7.0 191.0 571.5 Balance sheet total 3,269.6 2.2 26.0 -36.2 417.1 3,674.3 Equity 3) 1,483.1 0.0 0.0 -29.8 138.1 1,591.4 Provisions 273.7 0.5 7.0 -5.3 13.2 288.1 Liabilities 1,512.8 1.7 19.0 -1.1 265.8 1,794.8

1) Effects of companies and stakes acquired or sold in 2006 2) Foreign exchange effects 3) Including minority interest 65 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Organic and acquisition- The acquisitions of Robinson (USA), Biegonice (Poland), Bogen (Germany) and Colorbeton based increase in (Czech Republic) led to an increase of 1% in the balance sheet total. The 13% organic change balance sheet total in the balance sheet total resulted from high investments in the construction of new plants and expansion of capacity as well as takeovers that were designed as asset deals.

Balance Sheet Ratios 2005 2006

Capital employed in € mill. 2,289.4 2,598.2 Net debt in € mill. 934.4 1,159.8 Term Structure of Equity ratio in % 45.4 43.3 Financial Liabilities Gearing in % 63.0 72.9 Asset coverage in % 66.4 62.9 Working capital to revenues in % 24.5 23.9 3 1

Treasury In order to strengthen the capital base of the Group, Wienerberger issued a € 500 million 2 hybrid bond in February 2007. The bond is subordinated to all other creditors, and has a perpetual maturity as well as a fixed coupon of 6.5%. Interest payments can be suspended if the dividend is not 1 <1 year 43% 2 1-5 years 25% paid. Wienerberger AG, but not the creditors, may call the bond after a period of ten years or extend 3 >5 years 32% its term at a variable interest rate. In accordance with IFRS, this instrument is treated as equity.

Including the interest rate swaps that were concluded at an attractive level, fixed-interest liabilities equaled 37% and variable interest liabilities 63% of the portfolio as of December 31, 2006. The placing of the hybrid bond again raised the fixed interest component by a significant Term Structure of amount. The major component of financing is denominated in the euro. Wienerberger monitors Financial Liabilities the foreign exchange risk associated with balance sheet items based on the net risk position in its in € mill. major currencies (USD, CHF, CZK, GBP, PLN) and hedges this risk with foreign currency swaps based on monthly stress tests. Since the risk position includes both equity and debt components, 604.6 600 an allocation to financial liabilities does not make sense.

500

464.4 Treasury Ratios 2005 2006

400 Net debt / EBITDA 2.2 2.5 EBITDA / Net financing costs 9.9 9.8 300 EBIT / Net financing costs 6.2 6.2 242.7 FFO 1) / Net debt 31% 28% 200 RCF 2) / Net debt 16% 21%

100

58.3 1) Funds from operations; net debt excluding Group balances from financing, plus obligations from pensions and operating leases

32.8 2) Retained cash flow; net debt excluding Group balances from financing, plus obligations from pensions and operating leases 0 2007 2009 >2011 2008 2010 Cash Flow The growth in operating earnings supported an 8% increase in gross cash flow to € 370.8 million. Together with cash outflows generated by the largely growth-related increase in working capital, cash flow from operating activities reached € 351.6 million in 2006 (2005: € 250.2 mill.). Cash flow from investing activities totaled € -509.7 million. Free cash flow (cash inflow from operating activities minus cash outflow from investing activities plus growth investments) of € 272.1 million (2005: € 223.8 mill.) forms the basis to continue the growth of the Wienerberger Group, which is

66 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Financial Review Segments Financial Statements Service

financed to a substantial degree by internally generated funds. Higher earnings and an improvement Strong increase in free in working capital supported a strong increase in free cash flow during 2006. Cash flow from cash flow due to higher earnings and development financing activities includes € 86.4 million for the dividend of € 1.18 per share that was distributed of working capital for the 2005 Business Year. Cash flow of € 217.3 million from the change in interest-bearing liabilities resulted from an increase in borrowings to finance investments and working capital.

Cash Flow Statement 2005 2006

in € mill. in € mill. Cash flow from operating activities 250.2 351.6 Maintenance capex (maintenance, rationalization, environment) -88.2 -100.2 Bolt-on projects (new plant construction, extensions, small acquisitions) -250.5 -334.7 External growth projects (large acquisitions) 0.0 -95.5 Divestments and other 61.8 20.7 Cash flow from investing activities -276.9 -509.7 Growth investments 250.5 430.2 Free cash flow 223.8 272.1

Investments Investments totaled € 530.4 million for the reporting year (2005: € 338.7 mill.). Maintenance, € 334.7 million for bolt- rationalization and environmental investments (maintenance capex) equaled € 100.2 million (2005: on projects, € 95.5 million for Robinson acquisition € 88.2 mill.) or 58% (2005: 56%) of depreciation for the year. This represents the part of capital expenditure that is required to maintain current production capacity and modify equipment to meet the latest technical standards. A total of € 334.7 million (2005: € 250.5 mill.) was spent on smaller acquisitions as well as the construction of new plants and capacity extensions (bolt-on proj- Total Investments ects) in existing markets. The bolt-on investments in 2006 were equally spent in Central-East in € mill.

Europe with a share of 32%, Central-West Europe with 25% and North-West Europe with 35%. 700

The remaining 8% of bolt-ons were used for the USA. In the past year, € 95.5 million was invested 632.6 600 in the acquisition of Robinson Brick. 14% 530.4 500 Investments in tangible fixed assets are divided among the various asset groups as follows: land 28% 19% and buildings at € 82.9 million, machinery and equipment at € 161.6 million, fixtures, fittings and 400 63% office equipment at € 11.7 million and construction in progress at € 136.2 million. 338.7 58% 300 26% Development of Non-Current Assets Intangible Tangible Financial Total 74% 200 in € mill. in € mill. in € mill. in € mill. 31.12.2005 563.9 1,540.1 128.1 2,232.1 100 Capital expenditure 1) 13.6 347.1 3.9 364.6 18% Changes in the consolidation range 85.4 47.6 0.1 133.1 0 Amortization and depreciation -8.8 -170.3 0.0 -179.1 2004 2005 2006 Disposals 0.3 -14.5 -4.9 -19.1 External projects Currency translation and other -17.0 -8.8 25.8 0.0 Bolt-on projects 31.12.2006 637.3 1,741.2 153.0 2,531.6 Maintenance capex

1) Additions as per schedule of fixed and financial assets

67 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Total Investments 1) 2005 2006 Change

in € mill. in € mill. in % Central-East Europe 122.4 133.7 +9 Central-West Europe 61.9 101.0 +63 North-West Europe 113.6 151.7 +34 USA 39.5 142.0 +259 Investments and Other 1.3 2.0 +54 Wienerberger Group 338.7 530.4 +57

1) Additions to tangible and intangible assets, including working capital and changes in the consolidation range or maintenance capex plus growth investments

Wienerberger Value Management Increase in company Growth in the value of our Company forms the cornerstone of our corporate strategy. For value as the focus of internal operating management, we therefore calculate a cash-based pre-tax return for all levels of strategy the Group. The key ratios are cash flow return on investment (CFROI = EBITDA / historical capital employed) and cash value added (CVA). The CFROI model allows us to compare the various segments of the Group, independent of the age structure of their plants. For all segments we have established a minimum sustainable CFROI target of 12% (= hurdle rate), after adjustment for non- recurring income and expenses. CVA is calculated based on the CFROI of the individual segments compared to the 12% internal hurdle rate (= 10% pre-tax WACC + 2% economic depreciation), which is then multiplied by capital employed (CE) at acquisition cost. CVA shows the absolute operating cash value added by the individual segments.

Group CFROI matches Calculation of Group CFROI 2005 2006 hurdle rate of 12% Operating EBITDA 1) in € mill. 428.4 471.9

Capital employed in € mill. 2,289.4 2,598.2 Accumulated depreciation in € mill. 1,231.2 1,349.8

Historical capital employed in € mill. 3,520.6 3,948.0

CFROI in % 12.2 12.02)

Two operating segments CFROI 2006 by Segment EBITDA 1) Historical CE CFROI CVA meet target, USA slightly in € mill. in € mill. in % in € mill. lower due to Robinson takeover Central-East Europe 158.1 1,084.5 14.6 28.0 Central-West Europe 96.1 724.9 13.3 9.1 North-West Europe 177.7 1,527.0 11.6 -5.5 USA 63.4 568.3 11.2 -4.8 Investments and Other 3) -23.4 43.3 -54.0 -28.6 Wienerberger Group 471.9 3,948.0 12.0 2) -1.9 2)

1) Adjusted for non-recurring income and expenses 2) After an adjustment for the acquisition of Robinson Brick in the USA, CFROI equals 12.1% and CVA € 4.5 million 3) Including holding company costs

68 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Financial Review Segments Financial Statements Service

Group CFROI equaled 12.0% for 2006, and exactly reflects the hurdle rate. Market declines CFROI and the acquisition of Robinson Brick in the USA during the reporting year as well as higher energy

costs caused a slight decline in CFROI below the 2005 level of 12.2%. After an adjustment for the 3,948.0

Robinson takeover, both Group CFROI and CFROI in the USA exceed the benchmark at 12.1% 3,520.6 and 12.3%, respectively. The North-West Europe segment temporarily failed to meet the 12% 3,140.9 15% hurdle rate because of capacity expansion, and the USA fell slightly below this target because of 12.9 12.2 12.0 the Robinson acquisition. Central-East Europe and Central-West Europe exceeded the internal 12% benchmark by a significant margin. 9%

In addition to CFROI, return on capital employed (ROCE) is also calculated at the Group 6% level. This indicator is computed by comparing net operating profit after tax (NOPAT) to capital 3% employed for the entire Group. The ratio indicates the extent to which Wienerberger meets the yield required by investors. The average cost of capital for the Group is based on the minimum 0% 2004 2005 2006 return expected by investors for funds they provide in the form of equity and debt. The weighted average cost of capital (WACC) is determined by adding an appropriate risk premium for stock Hist. CE in € mill. investments to the actual cost of debt for Wienerberger. The after-tax WACC equaled 7.5% for CFROI in % 2006 and reflects the prior year level. Hurdle Rate in %

Net operating profit after tax (NOPAT) increased 13% to € 229.0 million in 2006. Capital employed rose 13% to € 2,598.2 million because of the growth investments. ROCE reached 8.8% (2005: 8.9%), which results in higher EVA® of € 34.1 million than in 2005 (€ 31.8 mill.). After an adjustment for the acquisition of Robinson Brick, ROCE equaled 9.1% and EVA totaled € 39.0 million.

Calculation of Group ROCE 2005 2006 ROCE equals 8.8% and

1) clearly exceeds WACC Operating EBIT in € mill. 270.3 299.6 of 7.5% Taxes in € mill. -54.8 -59.0 Adjusted taxes in € mill. -12.0 -11.6

NOPAT in € mill. 203.5 229.0

Equity and minority interest in € mill. 1,483.1 1,591.4 Financial liabilities and financing leases in € mill. 1,186.5 1,402.8 Intercompany receivables and payables from financing in € mill. -9.9 -9.5 Cash and financial assets in € mill. -370.3 -386.5

Capital Employed in € mill. 2,289.4 2,598.2

ROCE in % 8.9 8.8 2)

Value Ratios 2005 2006 2) Negative CVA of € -1.9 million due to ROCE in % 8.9 8.8 US acquisition of Robinson 3) EVA in € mill. 31.8 34.1 Brick at mid-year CFROI in % 12.2 12.0 CVA in € mill. 5.9 -1.9

1) Adjusted for non-recurring income and expenses 2) After an adjustment for the acquisition of Robinson Brick in the USA, ROCE equals 9.1% and EVA totals € 39.0 million, CFROI equals 12.1% and CVA totals € 4.5 million 3) EVA is a registered brand name of Stern Stewart & Co.

69 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Procurement

Strategic procurement The rapid expansion and decentralized structure of the Wienerberger Group have created a department helps realize wide range of challenges for our strategic procurement department. Our goal in this area is to identify synergies in the Group synergies in close cooperation with local Group companies, and to realize these synergies through coordinated actions on procurement markets. We also work to improve the efficiency and the scope of our procurement services on a continuous basis.

Clay supply secured Our most important raw material is clay, and our supplies of this material are secured for the for the long-term foreseeable future. Roughly two-thirds of required clay reserves are owned by the Group, and the rest are safeguarded through long-term mining contracts.

Energy Costs The greatest challenge for procurement in 2006 was the volatility of energy prices and the cost as a % of revenues of materials. Following a sharp rise in 2005, energy prices – especially natural gas – continued to rise throughout 2006. The cost of energy for the Group totaled € 316.0 million, or 14.2% of revenues

14.2 14 for the reporting year. This represents an increase of € 65.6 million (+26%) over 2005, whereby 7% 12.8 5% € 47 million was triggered by price increases and € 19 million by additional production volume. 7% 12 11.3 6% The price-related increase resulted above all from a massive rise in the cost of crude oil, which 4% 22% 7% 10 subsequently led to higher prices for natural gas and electricity. Group expenses for energy can be 25% classified into 66% for natural gas, 7% for crude oil, 22% for electricity and 5% for coal and other 28% 8 sources. 6 66% Energy markets are subject to varying dynamics because of different regional hedging mecha- 62% 4 61% nisms and price formulas. For this reason, we have defined the following guidelines for non-regulated 2 energy markets: at least 75% of energy costs must be hedged for the next six months, 50% for the

0 next 12 months and 25% for the next 24 months. Wienerberger specialists analyze local price devel- 2004 2005 2006 opments and close contracts for the required supplies to optimize energy purchases. Our long-term Natural gas strategy is managed by the central procurement department in coordination with the Group’s risk Electricity management based on quarterly cash flow at risk calculations. As part of a rolling planning process Coal and other and depending on market trends, the prices for part of the required energy volumes are fixed for Crude oil up to two years in advance. We have secured roughly 65% of our natural gas requirements for the next 12 months through contracts with set prices and 20% of our purchases are made in the regulated markets of Central-East Europe where opportunities for hedging are lacking. (In these countries, energy prices are set by the government but based on global market prices.)

New hedges for A number of long-term electricity supply contracts expired in 2006, which had provided electricity prices Wienerberger with relatively favorable purchase conditions in past years. New contracts were concluded concluded at current market conditions, and secure our electricity requirements for the coming years by up to 100% depending on the country.

Greater transparency Based on the volumes already secured, we expect price-related increases of roughly € 30 through energy million in the cost of energy for 2007. Energy costs are a focal point of our risk management, and information system the further development and optimization of our energy information system will therefore remain a focus of our procurement strategy for 2007.

70 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Procurement Outlook and Goals Segments Financial Statements Service Outlook and Goals

Forecasts for 2007 indicate that new residential construction should continue to reflect the Optimistic outlook for prior year trend, with strength in Europe and weakness in the USA. For Central-East Europe we Europe, further decline expected in US housing expect further growth and strong demand for bricks, especially in Poland, Romania and Bulgaria. starts In Russia Wienerberger has followed the start of operations in its first plant with further projects in order to develop a relevant position. We also anticipate positive development in Western Europe. Residential construction should remain strong in Belgium and France, and there are signs of increasing momentum in the Netherlands and Great Britain, where construction activities have been at a moderate level during recent years. The improved sentiment in Germany leads us to expect good, but at least stable, demand during the current year. In contrast, we do not see any recovery in US new residential construction before the second half of 2007. The current high supply of unsold houses must first return to a reasonable level of under six months before this situation can improve. We intend to use the continued optimization of our plants and full-year consolidation of Robinson Brick to also generate earnings growth in the USA during 2007.

Based on our strong expansion program, we are reinforcing our goal to generate above-average Goal for above-average earnings growth in comparison to the building materials sector (i.e. approx. 10%). We expect an increase in earnings confirmed and increase of € 30 million in costs from higher energy prices and a further market decline in the USA, continuation of ambitious but a positive economic climate in Europe. Our expansion plans call for bolt-on growth invest- growth program ments of at least € 250 million in 2007. A further € 130 million will be invested in the acquisition of Baggeridge Brick, if the UK Competition Commission approves this transaction. We have also budgeted € 120 million for maintenance capex to cover the refitting and optimization of existing equipment, which could bring our total investments to € 500 million in 2007.

Revenues Total Investments 2) Revenue and Investment Planning 2006 Plan 2007 2006 Plan 2007

in € mill. in € mill. in € mill. in € mill. Central-East Europe 616.0 695.5 133.7 160.0 Central-West Europe 469.2 512.1 101.0 40.0 North-West Europe 827.5 917.3 151.7 250.0 USA 349.5 407.9 142.0 45.0 Investments and Other 1) -37.2 -32.7 2.0 5.0 Wienerberger Group 2,225.0 2,500.1 530.4 500.0

1) Group eliminations are included in this segment 2) Includes growth investments and maintenance capex (replacement, optimization, environment)

We will presumably not reach our goal to generate a return on capital employed (ROCE) of ROCE consistently 10% by the end of 2007 because we have further intensified our growth program. However, the exceeds WACC of 7.5% ROCE recorded by Wienerberger consistently exceeds the Group’s cost of capital of 7.5% by a significant amount. The EBITDA margin should rise steadily from 21 to 23% over the coming years, whereby we have adjusted our target of 25% to reflect both our accelerated growth course and investments in US direct sales (brick merchants with lower margins).

This annual report includes information and forecasts that are based on the future development of the Wienerberger Group and its member companies. These forecasts represent estimates, which were prepared based on the information available at this time. If the assumptions underlying these forecasts are not realized or risks – as described in the risk report – should in fact occur, actual results may differ from the results expected at this time. This annual report is not connected with a recommendation to buy or sell shares in Wienerberger AG.

71 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 SEGMENTS

Plant Sites and Market Positions

Wienerberger is the only international producer of bricks and roof tiles, with a total of 259 plants in 25 countries and 5 export markets. We focus on our core areas of expertise and work steadily to strengthen our geographic portfolio. In this way, we are able to offset fluctuations on individual markets. We don’t want to be everywhere – our objective is to develop strong positions in the markets in which we are present. This includes further expansion in the East as well as optimization in the West.

Wienerberger Markets in the USA

2 3 3 1 Montana Indiana Michigan

1 Illinois Pennsylvania Wisconsin 1 Ohio

1 Nebraska 5 3 New York

2 1 3 3 New Jersey

6 Delaware 1 2 2 Maryland 3 1 2 1 West Virginia 4 1 2 1 Virginia 5 1 2 1 1 North Carolina

1 3 6 5 4 South Carolina

6 4 1 2 1 Oklahoma Georgia 2 Utah 8 4 Florida 1 1 1 Colorado Arkansas

2 1 Kentucky 2 2 2 Wyoming Mississippi 1 Alabama

3 4 2 Number of sites Tennessee Facing bricks Concrete products Distribution outlets Market positions 3 2 1 Status March 2007 1 72 Facing bricks WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Plant Sites and Market Positions Financial Statements Service

13 1 1 1 1 Wienerberger Markets in Europe Estonia Russia

2 3 3 Finland 2 Poland 24 1 1 Sweden

1 13 Norway 4

13 6 Denmark

2 Germany 4 3 1 1 1 Netherlands 1

1 1

9 2

Great Britain 3

10 1 1 11 7 1 2 8 4 1 1 9 1 2 3 Belgium Czech Republic 44 1 1 3 7 2 France 2 4 1 5 1 1 Slovakia 2 2 2 1 Switzerland 1 1 1 1 Austria 1 1 1 1 2 2 1 1 1 1 1 Romania

4 1 15 1 1 Bulgaria 5 1 1 6 Italy Macedonia 2 2 2 Hungary Slovenia 1 Serbia and Montenegro

3 1 1 Croatia

Market positions Number of plants 1 Hollow and/or facing bricks Hollow bricks 1 Clay roof tiles Facing bricks Roofing systems 1 Joint ventures Pavers Markets with plant sites 3 Bramac concrete roof tiles (50%) 2 1 1

Export markets and Tondach Gleinstätten clay roof tiles (25%) 73 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Central-East Europe

Excellent earnings The Central-East Europe segment covers our brick and roof tile activities in Austria and growth in Central-East Eastern Europe as well as Semmelrock (concrete pavers, 75% stake, full consolidation), Bramac Europe, above all during second half-year (concrete roof tiles, 50% stake, proportional consolidation) and Tondach Gleinstätten (clay roof tiles, 25% stake, at equity consolidation). Revenues in this segment rose by 21% to € 616.0 million in 2006 and EBITDA increased 16% to € 158.1 million. All countries reported higher earnings, with the exception of the Czech Republic, Slovakia and Croatia. We were also able to follow the declines from 2005 with significant improvements in Poland and Hungary as well as at Bramac and Semmelrock during the reporting year.This segment generated 28% of revenues and 34% of Group EBITDA in 2006. 616.0 Central-East Europe 2005 2006 Chg. in % 507.3 489.7 Revenues in € mill. 507.3 616.0 +21

1) 29.0 30% EBITDA in € mill. 136.7 158.1 +16 EBIT 1) in € mill. 87.0 103.3 +19 26.9 25.7 1) 20% CFROI in % 13.9 14.6 - CVA 1,2) in € mill. 18.5 28.0 +51

10% Total investments in € mill. 122.4 133.7 +9 Capital employed in € mill. 569.5 624.3 +10 0% Employees 4,767 4,612 -3 2004 2005 2006 Sales volumes hollow bricks 3) in mill. NF 3,387 3,931 +16

2 Revenues in € mill. Sales volumes pavers in mill. m 6.63 7.97 +20

4) 2 EBITDA margin in % Sales volumes concrete roof tiles in mill. m 15.83 18.43 +16

1) Adjusted for non-recurring income and expenses 2) Hurdle rate = 12% 3) Sales volumes for 2005 are shown without special products in order to improve comparability; therefore, the sales volumes in this annual report differ from the figures reported in the prior year 4) Sales volumes are not proportional, but reflect 100%

Poland (5% of Group revenues) High revenue and After a major decline in the previous year, Poland reported a massive increase of more than earnings growth in 30% in housing starts as well as a further strengthening of the trend to multi-storey dwellings in Poland 2006. We utilized the weak prior year market conditions to acquire two brick plants in Krakow, a city in the south of Poland, during February 2006. This expanded presence will now allow us to market our high-quality hollow bricks throughout the entire country from local sites. In 2006 we also raised hollow brick prices from the previously low level. Despite a delay in the start of the construction season and temporary plant shutdowns due to bad weather, we increased sales volumes in all product areas (hollow bricks, facing bricks and clay roof tiles) and realized a substantial improvement in earnings. Poland is an important growth market for Wienerberger because new residential construction still remains at a low level compared to Western Europe. In order to adjust our capacity to meet the high demand, operations at the Lajsi and Osiek plants, which were closed in 2005, were restarted and production capacity will also be increased at other locations. Depending on the general development of the market, we expect a further increase in revenues and earnings during 2007.

74 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Central-East Europe Financial Statements Service

Czech Republic (4% of Group revenues) Housing starts in the Czech Republic rose by roughly 8% during 2006 after slow development Import pressure limits in the previous year. However, imports from the neighboring countries of Germany and Austria earnings improvement in Czech Republic increased at the same time and intensified both competition and the pressure on prices. Excellent development was registered in sales volumes of our plane brick products, and we met this trend by installing a further plane brick grinder at the Tunechody plant. In spite of continuing efforts to optimize production costs, results were unable to match the record prior year level. For 2007 we expect moderate growth in residential construction as well as a further increase in competition following an expansion in the production capacity for substitute products. Our goal is to safeguard our market position and high level of earnings by focusing on our high-quality product lines with their distinctive thermal and sound insulation properties.

Hungary (3% of Group revenues) Residential construction in Hungary was affected by the elimination of a builders’ allowance Higher exports drive in 2006, but declines at the start of the year were followed by a temporary recovery of demand revenue and earnings growth in Hungary during the second six months. This unexpected interim high was triggered by the introduction of a tax on interest income, which led to stronger investments in real estate. Higher domestic demand as well as a massive rise in exports to Romania and Bulgaria supported a significant increase in sales volumes. Although competition remained intense, a focus on higher quality products allowed us to increase the price level and thereby realize a substantial improvement in revenues and earnings. For 2007 we do not expect any impulses for growth from the domestic market, and we will therefore continue to focus on exports to Romania and Bulgaria and also start sales to Ukraine. We will differentiate from the competition by concentrating on our high-quality product lines, and intend to use this strategy to hold earnings at a stable level despite further increases in the cost of energy and a forecasted market decline.

Romania (2% of Group revenues) The residential construction sector in Romania recorded growth of roughly 20% for 2006, Increase in capacity which was supported by strong economic development as well as a positive sentiment in the busi- and higher earnings in Romania ness sector prior to the EU accession. Wienerberger was able to substantially improve sales volumes and implement moderate price adjustments in this favorable environment, while also increasing imports from Hungary by a further sizeable amount. Following the complete reconstruction of the Sibiu plant, we started work on the construction of another new production facility in Triteni Cluj and will implement measures to optimize performance at the Gura Ocnitei plant. The increase in sales volumes and higher prices led to a substantial improvement in both revenues and operating earnings. In order to also benefit from the high potential of this market in the coming years, we are evaluating possible locations for new facilities. The start-up of the Triteni Cluj plant is scheduled for the fourth quarter of 2007. Our goal is to achieve a further strong increase in revenues and earnings during 2007.

75 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Austria (2% of Group revenues) Higher sales volumes Housing starts in Austria rose slightly during 2006, but the new residential construction market support development of is still characterized by excess capacity. Domestic sales rose due to the success of the Porotherm revenues and earnings in Austria plane brick product line and the acquisition of a hollow brick plant in the Lower Austrian city of Blindenmarkt, but exports declined. Operating earnings improved despite an increase in production costs and a plant shutdown, above all because of price adjustments. For 2007 we expect a slight improvement in market conditions. In combination with an optimized plant structure and better utilization of capacity, we plan to increase sales volumes and realize further growth in earnings.

Slovakia (1% of Group revenues) Intense competition Residential construction in Slovakia rose by 17% in 2006, but competitive pressure was slows earnings growth increased by rising imports from Poland and Hungary. In spite of this development, Wienerberger in Slovakia was able to increase sales volumes of its plane brick product line and strengthen the focus on higher quality products with the market introduction of the high thermal insulating Porotherm S.i brick. Temporary shutdowns at the Boleraz and Ruzomberok plants were accepted to reduce inventories, but combined with higher production costs to bring about a decline in earnings. However, the level of earnings in this country still remains satisfactory.After the completion of optimization measures in the Ruzomberok plant, we expect an improvement in earnings during 2007, if the growth trend in residential construction continues.

Croatia/Bosnia and Slovenia (2% of Group revenues) Higher sales volumes Although exports from Croatia to Bosnia decreased in 2006, we were able to increase sales in Croatia, but earnings volumes because of higher domestic demand. The optimization of the Karlovac plant had a posi- below prior year level tive impact on product quality, but a shift in the product mix to traditional bricks led to a decline in earnings. The market entry of a new competitor is expected to intensify competition during 2007. However, we still forecast an improvement in earnings, which should be supported by rising construction activity in Zagreb and the coastal region, and we will continue to concentrate on higher quality products.

Earnings growth Because of the stable development of demand in Slovenia we focused on exports to Italy and in Slovenia Croatia during 2006. This led in total to a significant improvement in sales volumes and earnings. Our goals for 2007 include meeting higher demands for thermal insulation and seismic resistance in order to support continued growth.

Russia and Bulgaria (new markets) Plant start-up and The residential construction market in Russia is concentrated in the major city centers as well new location secured as the economically strong regions of the country, with growth reaching two-digit rates in 2006. In in Russia order to benefit from this momentum, we started operations with the first phase of our new plant in Kiprevo, 120 km northeast of Moscow, during November of the past year. This plant is in the start-up phase with necessary optimization measures and product line developments currently in progress, and we expect the first positive contribution to earnings during the current year. Our plans for 2007 will also focus on the construction of a new plant in the greater Kazan area, and we are evaluating the realization of a second expansion phase in Kiprevo.

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In February 2006 Wienerberger acquired a brick plant in Lukovit, 120 km northeast of Sofia. New plant construction This transaction marked the start of operating activities in Bulgaria, which was previously supplied and development of organization in Bulgaria through imports only. After the development of a local organization and the rapid completion of construction on a new plant, the extruders are scheduled to start operations in mid-2007. Hollow bricks are by far the most important material for new residential construction in Bulgaria with a share of more than 70%, and this situation presents us with excellent opportunities for growth. Our mid-term goal is to develop a broad-based presence in this country.

Semmelrock Concrete Pavers (4% of Group revenues) Our specialist for high-quality concrete pavers continued to expand its market position in all Higher earnings and regions of Eastern Europe during 2006 and also recorded a massive increase in EBITDA. The only strengthening of market position by Semmelrock earnings decline was registered in Austria. However, we expect a reversal of this local trend in 2007 following the introduction of new products and the optimization of sales structures. In Hungary the strategic positioning of Semmelrock in the high-quality product segment proved to be a success and, in combination with the optimization of the new plant in Miskolc and expansion of the dealer network, led to a significant increase in sales volumes and earnings. In Slovakia the company strengthened its market position and improved efficiency at the Sered plant. In Poland the three plants operated at full capacity, and we were able to further increase our market share and record substantial earnings growth. In Croatia we became the market leader following the expansion of our sales network. Semmelrock entered the market in the Czech Republic with the acquisition of Colorbeton during the reporting year, and will focus on improving sales and production efficiency in this company during 2007. The construction of a new plant in Bucharest (Romania) was completed in 2006 and the necessary administrative and sales structures were developed at the same time. In 2007 Semmelrock will again concentrate on further expansion in Eastern Europe and the optimization of products and costs as well as the continued improvement of earnings.

Bramac Concrete Roof Tiles (3% of Group revenues) In 2006 Bramac (50% stake, proportional consolidation) was able to improve its positions on Bramac benefits from the company’s traditional markets in Central and Eastern Europe. The successful extension of the dynamic growth in Bulgaria and Romania product portfolio led to further growth in revenues and earnings. Particularly strong growth was recorded in Romania and Bulgaria. Supported by this development, Bramac plans to expand the Silistra plant in Bulgaria during 2007 and start preparations for another production facility near Sofia. In Romania plans call for the construction of a second plant near Bucharest to allow for the better realization of opportunities presented by the steady growth of this country. Based on positive development in Central-East Europe, Bramac targets a further improvement in earnings during 2007.

Tondach Gleinstätten AG (consolidated at equity) In 2006 Tondach Gleinstätten, a 25% investment that is consolidated at equity in the Modernization and financial statements of the Wienerberger Group, was able to increase its market positions, above all capacity expansion by Tondach Gleinstätten in the Czech Republic, Slovakia and Macedonia and also developed export structures for Bulgaria. The high level of investment activity led to a slight decline in operating earnings. Following the expansion of production lines in Serbia during the past year, the increase in capacity at the Croatian plant in Dakovo will be completed and the Sibiu plant in Romania will be enlarged.

77 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Central-West Europe

Fastest growing segment Central-West Europe covers our brick and roof tile activities in Germany, Italy and Switzer- due to recovery of land. The development of business in 2006 was influenced by recovery in Germany and steady construction sector in Germany growth in Switzerland. However, lower sales volumes were recorded in Italy. Segment revenues rose by 22% to € 469.2 million and EBITDA by 23% to € 96.1 million, supported by the initial consolidation of new roof tile activities in Germany. Central-West Europe generated 21% of Group revenues and 20% of EBITDA for the reporting year.

469.2 Central-West Europe 2005 2006 Chg. in % 385.4

373.2 Revenues in € mill. 385.4 469.2 +22

1) 30% EBITDA in € mill. 78.0 96.1 +23 EBIT 1) in € mill. 43.3 59.1 +36 23.3 20% CFROI 1) in % 12.1 13.3 - 20.2 20.5 CVA 1,2) in € mill. 0.7 9.1 >100

10% Total investments in € mill. 61.9 101.0 +63 Capital employed in € mill. 396.3 453.8 +15 0% Employees 2,002 2,151 +7 2004 2005 2006 Sales volumes hollow bricks 3) in mill. NF 1,811 1,849 +2

3) Revenues in € mill. Sales volumes facing bricks in mill. WF 155 197 +27

3) 2 EBITDA margin in % Sales volumes clay roof tiles in mill. m 5.38 9.25 +72

Germany (14% of Group revenues) Significant recovery on New residential construction in Germany followed a longer series of annual declines with construction sector in recovery of +4% in 2006, which was supported by advance purchases before the elimination of the Germany during 2006 homebuilders’ allowance and a VAT increase in 2007. Growth in the renovation and commercial construction sectors also exceeded expectations with a 7% increase in each area.

Expansion of market Wienerberger strengthened its market position in Germany with four acquisitions during the position through reporting year. In the facing brick segment, we purchased the Knabe company near Bremen. The acquisitions takeover of Penter clay pavers in Lower Saxony made us the leader in this sector of the German market. With the acquisition of the Bogen and Straubing plants in Bavaria, we completed the development of a country-wide clay roof tile network only several years after our market entry.All these plants represent optimal additions to our site concept and led to an expansion of our existing product lines. In 2006 we began to integrate our roof tile activities into a homogeneous company, and expect further earnings growth from these measures in the future.

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In the hollow brick area (ca. 60% of revenues) we increased average prices by a slight amount Higher earnings with a higher quality product mix. Sales volumes rose as a result of better domestic demand and in all product areas growth in exports. Although business in the facing brick and clay paver segment improved, earnings still remained at an unsatisfactory level (ca. 10% of revenues). Integration and restructuring measures in the clay roof tile area (ca. 30% of revenues) led to a major turnaround in EBITDA. Wiener- berger recorded significantly higher earnings in Germany during the reporting year, not only as a result of acquisitions but also organic growth.

Our market expectations for 2007 are cautiously optimistic. Construction in the multi-storey Goal for 2007: further residential sector and commercial market should remain positive. The single and two-family housing earnings improvement in Germany segment could show a slight decline, but a more favorable trend is also conceivable. After completing a number of acquisitions in the facing brick and clay tile branches during recent years, we now intend to generate further earnings growth in 2007 based on our profit-oriented policy and the further optimization of product allocation and production costs.

Italy (3% of Group revenues) New residential construction in Italy reflected the weak state of the economy in 2006, and Pressure on prices due housing starts declined by roughly 3%. However, we were able to partly compensate lower sales to weaker demand and excess capacity in Italy volumes with prices adjustments and higher sales of premium products. The start of production at the Feltre plant allowed us to increase the share of plane bricks, but a decline in earnings from the high prior year level could not be prevented. In addition to product modifications for the improvement of seismic properties and thermal insulation, the installation of fast drying equipment at the Feltre plant represented the focal point of investments in 2006. The Italian brick market will also be characterized by excess capacity in 2007. In order to safeguard our earnings level, we will continue to focus on higher quality products and the further optimization of our cost structures.

Switzerland (3% of Group revenues) The market in Switzerland again reported favorable development in 2006 with a further slight Continued earnings increase in residential construction. We were able to record substantial growth in sales volumes of growth in Switzerland hollow bricks and insulating materials (purchased goods). In contrast, the clay roof tile area accepted a decline in sales volumes in order to implement price increases. In total, we recorded a further improvement in earnings during 2006. For 2007 we expect a stable earnings situation in line with market development.

79 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 North-West Europe

Growth driver in past The North-West Europe segment includes our brick and roof tile activities in Belgium, the years with renewed Netherlands, France, Great Britain, Scandinavia, Finland and the Baltic States. In 2006 revenues increase in earnings rose by 11% to € 827.5 million and EBITDA increased 8% to € 177.7 million. This development was supported by the further strengthening of our market positions through bolt-on projects in all product areas as well as the sound development of residential construction in Belgium and France and satisfactory performance in Great Britain. North-West Europe recorded 37% of revenues and 38% of EBITDA in 2006. 827.5

747.9 North-West Europe 2005 2006 Chg. in %

633.3 Revenues in € mill. 747.9 827.5 +11

1) 30% EBITDA in € mill. 165.3 177.7 +8 EBIT 1) in € mill. 109.2 116.1 +6

22.1 1) 20% CFROI in % 12.1 11.6 - 21.2 21.5 CVA 1,2) in € mill. 0.9 -5.5 >100

10% Total investments in € mill. 113.6 151.7 +34 Capital employed in € mill. 952.9 1,058.9 +11

0% Employees 4,203 4,213 0

2004 2005 2006 3) Sales volumes hollow bricks in mill. NF 1,026 1,196 +17 Sales volumes facing bricks 3) in mill. WF 1,634 1,691 +3 Revenues in € mill. Sales volumes clay roof tiles 3) in mill. m2 11.84 12.60 +6 EBITDA margin in %

Belgium (10% of Group revenues) Sound earnings growth The construction sector in Belgium followed strong development in 2005 with a plus of 9% in in Belgium with higher new residential construction and 2% in the renovation segment for 2006. We registered substantial volumes and prices growth in sales volumes of hollow bricks, facing bricks and clay roof tiles, and could partly offset higher production costs with price rises. Our production capacity was expanded through the acquisition of the Ampe hollow brick plant near Ghent, the extension of the Pottelberg clay roof tile plant and the installation of two new kilns in the facing brick and clay roof tile area. In addition, our subsidiary in Belgium started a project to develop special thermal post-combustion equipment for the ceramics industry. Our sales structures were strengthened by the launch of two new showrooms. The expansion and optimization measures carried out during 2006 supported satisfactory growth in revenues and earnings despite a significant rise in energy costs. We expect a positive market climate throughout 2007 and strive for a further improvement in earnings, however, depending on the trend in energy prices.

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Netherlands (9% of Group revenues) New residential construction in the Netherlands was characterized by a steady increase in Higher market shares building permits during 2006. Completions also rose by 5% despite a shortage of insulating through increase in capacity in the materials and specialized labor. In contrast to this positive development, the volume of the brick Netherlands market stagnated due to a shift from the construction of single family houses to apartment buildings and social housing, where less bricks are used. In combination with the shutdown of an older plant during 2005, this led to only a slight improvement in revenues from facing bricks. However, we were able to grow sales volumes in the clay roof tile business by a substantial amount and nearly offset the impact of higher energy costs by increasing our selling prices. Stronger competition prevented a similar development in the clay paver area, where prices rose by a small margin but also sales volumes declined slightly. In total, Wienerberger recorded moderate earnings growth in the Netherlands during 2006. We doubled the capacity at our Kijfwaard West plant during the past year to further strengthen our leading position on the clay paver market. Production capacity was also expanded at the clay roof tile plants in Tegelen and the hollow brick plant in Brunssum. Based on these measures and expectations of a positive market climate, we anticipate earnings growth in the Netherlands during 2007.

France (7% of Group revenues) A favorable economic climate and low interest rates provided support for new residential Increase in market construction in France, which rose by 2% in 2006 to the highest level recorded in more than shares and higher earnings in France 20 years. This positive development and a further increase in market shares led to significant growth in sales volume of hollow bricks and clay roof tiles. In the facing brick area, the plant closure in Wizernes and the conversion of Angervilliers to hollow brick production had a negative impact on sales volumes. During the reporting year Wienerberger completed most of the work required for the changeover of the Angervilliers plant, the modernization of the Seltz plant and the expansion of the clay roof tile plant in Lantenne. We offset higher energy costs with price increases, which in total supported sound earnings growth. The acquisition of a majority stake in the Bar company strengthened our position on the facing brick market. Supported by the investments made in past years, we want to benefit from the continued positive market climate and record a further improvement in earnings during 2007.

Great Britain (6% of Group revenues) The brick market in Great Britain declined by 6% in 2006 due to a further shift from single Earnings improvement family houses to apartment buildings and a substantial drop in renovation. Temporary plant shut- despite market decline in Great Britain downs at the start of the year were the result, whereby these measures were also designed to minimize the impact of extremely high energy prices during the winter 2005/2006. The refitting of the Ewhurst plant and the expansion of Warnham allowed Wienerberger to regain market shares. In order to improve delivery conditions, the Smeed Dean plant was enlarged to provide additional storage capacity for the growing volume of imported clay roof tiles. Weaker demand made it difficult to implement price increases but higher sales volumes, especially in the low price segment, as well as flexible gas purchases and cost optimization supported an improvement in earnings.

81 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Conclusion of Wienerberger classifies Great Britain as a long-term growth market with potential for the Baggeridge takeover future. This led to our decision to announce a recommended cash offer for the publicly traded intended Baggeridge Brick PLC in August 2006. The required decision of the UK Competition Commission is expected in May 2007. With four plants in the Midlands and one in the south of England, the integration of Baggeridge with Wienerberger would develop a national presence on the British facing brick market. Even without this acquisition, it is our target to further grow revenues and earnings during 2007.

Scandinavia (2% of Group revenues) Increase in capacity In Denmark we recorded a substantial increase in sales volumes and prices, supported by a and higher earnings in positive market environment. However, earnings declined by a slight amount as a result of impair- Northern Europe ment charges to goodwill. Investments were prepared for the Pedershvile and Petersminde plants, which will be carried out in 2007. In Norway construction activity remained unchanged at a high level in 2006, but the demand for bricks declined slightly. In Sweden Wienerberger increased production capacity at its Haga and Sköldinge plants. The strong development of demand and successful implementation of price increases led to an improvement in earnings.

Finland and the Baltic States (1% of Group revenues) Earnings decline in In Finland the domestic market remained stable, but imports supported an increase in sales Finland, expansion of volumes of clay roof tiles. However, higher marketing and selling expenses led to a decline in earnings market positions in Baltic States for 2006. In the Baltic States sales volumes rose across all product groups and the facing brick plant in Aseri, Estonia, successfully started operations. Our plans foresee a further strengthening of our market position in this region with the construction of a hollow brick plant. We forecast a steady high pace of residential construction activity during 2007 and expect a significant improvement in sales volumes and earnings.

USA

Slump in housing starts New residential construction in the USA contracted stronger than expected in 2006, falling leads to lower sales 13% below the record 2005 level to roughly 1.8 million units. Results were sound at the start of volumes and earnings the year, but April brought an increasingly sharp drop in demand across all regions of the country. The decline ranged up to 30% on a monthly basis and was particularly strong in Midwest, which is one of our most important markets. Our subsidiary General Shale recorded better development than the total market, with a 10% decrease in sales volumes by year-end. The successful acquisition of Robinson Brick in June supported an increase of 4% in revenues to € 349.5 million. Operating EBITDA fell by 5% to € 63.4 million due to the lower utilization of capacity and higher selling and integration expenses. The USA is responsible for 16% of revenues and 13% of Group EBITDA.

82 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments North-West Europe USA Financial Statements Service

USA 2005 2006 Chg. in % 349.5 337.2 Revenues in € mill. 337.2 349.5 +4 284.4 EBITDA 1) in € mill. 66.4 63.4 -5 30% EBIT 1) in € mill. 51.8 48.2 -7

1) CFROI in % 14.1 11.2 - 20.8 20% 1,2) in € mill. CVA 9.7 -4.8 >100 19.7 18.1 Total investments in € mill. 39.5 142.0 >100 10% Capital employed in € mill. 345.0 437.6 +27 Employees 2,194 2,483 +13 0% Sales volumes facing bricks in mill. WF 1,241 1,140 -8 2004 2005 2006

1) Adjusted for non-recurring income and expenses Revenues in € mill. 2) Hurdle rate = 12% EBITDA margin in %

Delivery bottlenecks in the past and the long-term potential created by the growth of the US Expansion of production population have led General Shale to expand its production capacity at a number of locations in capacity and stronger direct sales recent years. In Louisville (Kentucky), Brickhaven (North Carolina), Roanoke and Marion (Virginia), and Rome (Georgia) additional capacity of 240 million brick units was installed. These investments were made in order to create mega plant sites and thereby optimize production costs. The shutdown of smaller plants is foreseen during periods of lower sales. In connection with this strategy, we temporarily closed the plant in Lee County (North Carolina) during 2006 and relo- cated production to the more efficient Brickhaven plant. The outdated brick plant in Darlington, Pennsylvania, was also closed. A new concrete block plant started operations in Moncure to meet the growing demand for these products in North and South Carolina. In keeping with our strategy to expand direct sales, General Shale acquired two brick merchants: Curley Building Materials in Indianapolis (Indiana) and Modern Concrete in Louisville (Kentucky).

Wienerberger expanded its US presence into the western region of the country with the acqui- Entry in west of USA sition of Robinson Brick in 2006. In addition to a high-performance brick plant in Denver, the with acquisition of Robinson Brick company operates three concrete block factories and 17 sales outlets in seven states west of the Mississippi. This acquisition will lead to the realization of synergies, above all through the optimization of production costs, sales structures and cross-selling opportunities as well as the combination of product lines.

For 2007 we anticipate a further decline in housing starts. Recovery is expected during the Goal to increase revenues second half-year at the earliest, after the high supply of unsold houses has returned to a normal and earnings in 2007 despite market decline level. Wienerberger is prepared for this scenario, after it has adjusted its production capacity. Supported by the full-year consolidation of Robinson Brick and the optimization of production costs in the new plants we intend to realize an improvement in revenues and earnings for 2007.

83 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Investments and Other

Non-core activities and The Investments and Other segment comprises the non-core activities of the Wienerberger holding company costs in Group: Pipelife plastic pipes (50/50 joint venture with Solvay), real estate and Group headquar- this segment ters costs. In recent years the Pipelife Group has developed into an independent company with autonomous management, and is now regarded as a financial investment. It is therefore consolidated at equity, and is not included in the operating results of this segment.

Negative results due Revenues recorded by this segment rose 7% to € 21.7 million and EBITDA fell 30% to to inclusion of holding € -23.4 million. The growth in revenues resulted from an increase in service fees charged to the company costs Group’s operating subsidiaries as well as higher sales by the Wienerberger stove tile company. Earnings are negative because holding company costs are included in this segment.

Investments and Other 2005 2006 Chg. in %

Revenues in € mill. 20.2 21.7 +7 EBITDA 1) in € mill. -18.0 -23.4 -30 EBIT 1) in € mill. -21.0 -27.1 -29 Capital employed in € mill. 25.8 23.6 -9 Employees 161 180 +12

1) Adjusted for non-recurring income and expenses

Record results by The Pipelife Group, the fourth largest producer of plastic pipe systems in Europe, showed Pipelife after successful excellent development during 2006 with a further improvement over the record results generated optimization in past years in the previous year.A favorable operating environment in Europe combined with the optimization measures carried out in past years and the introduction of numerous innovative products led to a further improvement in revenues and earnings. Group revenues totaled € 784 million, which represents a plus of 10% over 2005, and EBITDA increased by 7% to € 80.2 million. The company recorded strong growth in Northern Europe, the Baltic States, the new EU countries, Russia and the Balkan region, while demand remained stable in Western Europe. Plastic pipe activities in the USA followed the slump in new residential construction at year-end, and triggered a decline in earnings. In 2006 Pipelife took important growth steps for the future with two acquisitions in Belgium and the Netherlands as well as the opening of a sales office in Bulgaria. The company’s strategy is focused on the expansion of market positions and a wide geographical presence in Europe. A duplication of the record results generated in 2006 is considered to be an ambitious goal for the coming year.

Sale of non-core During the 2006 Business Year we sold the Wienerberger stove tile company to a strategic investments and assets partner in keeping with our concentration on the core business. In addition, a large property in the south of Vienna was sold at a book gain of € 5.1 million. This gain is reported under non-recurring income, and largely offsets the non-recurring expenses of € 7.1 million that resulted from plant shutdowns. The sale of non-operating assets is designed to finance our core business, and we will continue to pursue this strategy in the future. At the present time, we estimate the value of our remaining non-operating real estate at € 40 million.

84 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review FINANCIAL STATEMENTS Corporate Governance The Company Review of Operations Segments Investments and Other Financial Statements Contents Service Contents

85 Financial Statements 86 Income Statement 87 Cash Flow Statement 88 Balance Sheet 89 Changes in Equity Statement 90 Table of Fixed and Financial Assets 92 Segment Reporting 94 Notes 94 General Information 94 Basis of Preparation (1) 94 Consolidation Range (2) 96 Acquisitions and Disposals (3) 97 Basis of Consolidation (4) 98 Foreign Exchange Translation (5) 99 Significant Accounting Policies (6) 103 Notes to the Income Statement 103 Revenues (7) 103 Material Expenses and Depreciation (8) 104 Personnel Expenses (9) 105 Employees (10) 105 Other Operating Expenses (11) 106 Other Operating Income (12) 106 Transition of Results according to Cost of Sales and Total Cost Methods (13) 106 Non-recurring Income and Expenses (14) 107 Interest Result (15) 107 Other Financial Results (16) 107 Income Taxes (17) 108 Earnings per Share, Recommendation for the Distribution of Profits (18) 109 Notes to the Cash Flow Statement 109 Cash Flow from Investing Activities (19) 110 Notes to the Balance Sheet 110 Fixed and Financial Assets (20) 111 Inventories (21) 112 Receivables and Other Assets (22) 112 Capital and Reserves (23) 113 Provisions (24) 114 Provisions for Pensions (25) 116 Provisions for Deferred Taxes (26) 117 Liabilities (27) 118 Contingent Liabilities and Guarantees (28) 118 Financial Instruments 118 Financial Instruments (29) 120 Derivative Financial Instruments (30) 120 Risk Report 123 Other Information 123 Significant Events occurring after the Balance Sheet Date (Supplementary Report) (31) 124 Related Party Transactions (32) 124 Stock Option Plan (33) 127 Group Companies 131 Unqualified Opinion 132 Financial Statements of Wienerberger AG

85 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Income Statement

2006 2005 Notes in TEUR in TEUR (7) Revenues 2,225,040 1,954,571 (8, 9, 13) Cost of goods sold -1,403,704 -1,210,986 Gross profit 821,336 743,585 (8, 9, 13) Selling expenses -409,921 -369,778 (8, 9, 13) Administrative expenses -129,290 -109,524 (11) Other operating expenses -33,285 -25,554 (12) Other operating income 54,271 31,556 (8) Amortization of goodwill -3,534 0 Operating profit before non-recurring items 299,577 270,285 (14) Non-recurring write-offs and provisions related to restructuring -7,141 -11,365 (14) Non-recurring income 5,056 10,637 Operating profit after non-recurring items 297,492 269,557 Income from investments in associates 26,154 29,513 (15) Interest result -48,167 -43,426 (16) Other financial results 1,860 -4,377 Financial results -20,153 -18,290 Profit before tax 277,339 251,267 (17) Income taxes -58,998 -54,834 Profit after tax 218,341 196,433 Thereof attributable to minority interest 2,395 2,080 Thereof attributable to equity holders 215,946 194,353

(18) Adjusted earnings per share before non-recurring items (in EUR) 3.02 2.67 (18) Earnings per share (in EUR) 2.95 2.66 (18) Diluted earnings per share (in EUR) 2.94 2.64 (18) Recommended or paid dividend per share (in EUR) 1.30 1.18

The following notes to the financial statements form an integral part of this income statement.

86 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Financial Statements Income Statement Cash Flow Statement Service Cash Flow Statement

2006 2005 Notes in TEUR in TEUR Profit before tax 277,339 251,267 Depreciation and amortization 172,323 158,124 Non-recurring write-offs related to restructuring 6,741 1,591 Write-ups of fixed and financial assets -1,541 -598 Increase/decrease in long-term provisions 2,929 12,994 Income from associates -26,154 -29,513 Income/loss from the disposal of fixed and financial assets -13,183 -17,691 Interest result 48,167 43,426 Interest paid -80,273 -55,878 Interest received 30,305 23,751 Income taxes paid -45,873 -44,352 Gross cash flow 370,780 343,121

Increase/decrease in inventories -34,836 -45,672 Increase/decrease in trade receivables -20,592 -9,580 Increase/decrease in trade payables 40,342 2,643 Increase/decrease in other net current assets -3,769 -40,474 Changes in non-cash items resulting from foreign exchange translation -326 206 Cash flow from operating activities 351,599 250,244

Proceeds from the sale of assets 29,206 61,398 Purchase of property, plant and equipment and intangible assets -360,659 -278,628 Payments made for investments in financial assets -3,946 -233 Increase/decrease in securities -5,118 438 Net payments made for the acquisition of companies -169,743 -60,035 Net proceeds from the sale of companies 574 157 (19) Cash flow from investing activities -509,686 -276,903

Increase/decrease in long-term financial liabilities -293,242 437,047 Increase/decrease in short-term financial liabilities 510,536 -190,195 Dividends paid by Wienerberger AG -86,415 -78,040 Dividends paid to minority shareholders and other changes in minority capital 840 2,464 Dividend payments from associates 3,676 2,004 Capital increase Wienerberger AG 0 0 Cash inflows from exercise of stock options 5,268 5,364 Purchase of treasury stock -8,892 -21,326 Cash flow from financing activities 131,771 157,318

Change in cash and cash at bank -26,316 130,659 Effects of exchange rate fluctuations on cash held -29 2,725 Cash and cash at bank at the beginning of the year 219,876 86,492 Cash and cash at bank at the end of the year 193,531 219,876

The following notes to the financial statements form an integral part of this cash flow statement.

87 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Balance Sheet

31.12.2006 31.12.2005 Notes in TEUR in TEUR Assets (20) Intangible assets 637,346 563,906 (20) Property, plant and equipment 1,712,395 1,507,125 (20) Investment property 28,773 32,984 (2, 20) Investments in associates 129,389 106,503 (20) Other financial assets 23,652 21,566 (26) Deferred tax assets 61,442 61,355 Non-current assets 2,592,997 2,293,439

(21) Inventories 509,843 445,879 (22) Trade receivables 222,325 184,407 (22) Other current receivables 115,632 103,567 (29, 30) Securities 40,004 22,402 Cash and cash at bank 193,531 219,876 Current assets 1,081,335 976,131 Total Assets 3,674,332 3,269,570

Equity and Liabilities Issued capital 74,168 74,168 Share premium 415,052 415,052 Retained earnings 1,174,075 1,031,209 Treasury stock -30,269 -28,133 Translation reserve -69,019 -38,909 Minority interest 27,436 29,717 (23) Equity 1,591,443 1,483,104

(24, 25) Employee-related provisions 73,024 75,671 (24, 26) Provisions for deferred taxes 110,569 105,318 (24) Other non-current provisions 58,090 53,463 (27, 29) Long-term financial liabilities 798,128 1,091,366 (27) Other non-current liabilities 48,278 51,102 Non-current provisions and liabilities 1,088,089 1,376,920

(24) Other current provisions 46,425 39,234 (27, 29) Short-term financial liabilities 606,613 97,873 (27) Trade payables 200,328 150,712 (27) Other current liabilities 141,434 121,727 Current provisions and liabilities 994,800 409,546 Total Equity and Liabilities 3,674,332 3,269,570

The following notes to the financial statements form an integral part of this balance sheet.

88 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Financial Statements Balance Sheet Changes in Equity Statement Service Changes in Equity Statement

Issued Share Retained Treasury Foreign Minority in TEUR capital premium earnings stock exchange interest Total Balance on 31.12.2004 74,168 415,052 962,644 -13,327 -105,502 34,178 1,367,214 Net profit/minority interest 194,353 2,080 196,433 Dividend payments -78,040 -2,467 -80,507 Foreign exchange adjustment 63,790 1,147 64,937 Foreign exchange adjustment to investments in associates 2,803 2,803 Hedging reserves -47,635 15 -47,620 Capital increase/decrease 2,356 2,356 Increase/decrease in minority interest -7,562 -7,562 Increase/decrease in treasury stock -1,156 -14,806 -15,962 Expenses from stock option plans 1,250 1,250 Other changes -208 -30 -238 Balance on 31.12.2005 74,168 415,052 1,031,209 -28,133 -38,909 29,717 1,483,104 Net profit/minority interest 215,946 2,395 218,341 Dividend payments -86,415 -910 -87,325 Foreign exchange adjustment -29,816 322 -29,494 Foreign exchange adjustment to investments in associates -294 -294 Hedging reserves 12,520 44 12,564 Capital increase/decrease 1,750 1,750 Increase/decrease in minority interest -5,840 -5,840 Increase/decrease in treasury stock -1,488 -2,136 -3,624 Expenses from stock option plans 2,181 2,181 Other changes 122 -42 80 Balance on 31.12.2006 74,168 415,052 1,174,075 -30,269 -69,019 27,436 1,591,443

The following notes to the financial statements form an integral part of this changes in equity statement.

89 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Table of Fixed and Financial Assets

Acquisition or Production Costs

Balance Change Foreign on in consoli- exchange Balance on in TEUR 1.1.2006 dation range incr./decr. Additions Disposals Transfers 31.12.2006 Goodwill 532,040 84,632 -16,437 7,598 0 0 607,833 Other intangible assets 50,552 598 100 5,962 841 -291 56,080 Intangible assets 582,592 85,230 -16,337 13,560 841 -291 663,913

Land and buildings 861,609 27,488 -93 55,381 20,907 29,942 953,420 Machinery and equipment 1,647,641 15,671 -11,116 145,930 21,692 64,260 1,840,694 Fixtures, fittings, tools and equipment 91,044 1,009 -349 10,723 3,481 -4,960 93,986 Prepayments and assets under construction 96,607 1,908 -2,452 134,263 231 -96,010 134,085 Property, plant and equipment 2,696,901 46,076 -14,010 346,297 46,311 -6,768 3,022,185

Investment property 55,709 0 -416 802 20,983 7,059 42,171

Investments in associates 65,631 688 -204 0 0 0 66,115

Investments in subsidiaries 5,557 -607 -2 3,756 4,281 0 4,423 Other investments 20,050 -12 -14 190 123 0 20,091 Other financial assets 25,607 -619 -16 3,946 4,404 0 24,514 3,426,440 131,375 -30,983 364,605 72,539 0 3,818,898

Acquisition or Production Costs

Balance Change Foreign on in consoli- exchange Balance on in TEUR 1.1.2005 dation range incr./decr. Additions Disposals Transfers 31.12.2005 Goodwill 490,568 9,726 23,334 8,428 16 0 532,040 Other intangible assets 43,980 -375 226 2,578 998 5,141 50,552 Intangible assets 534,548 9,351 23,560 11,006 1,014 5,141 582,592

Land and buildings 783,907 13,767 15,759 24,109 13,975 38,042 861,609 Machinery and equipment 1,455,455 25,341 43,280 54,669 48,511 117,407 1,647,641 Fixtures, fittings, tools and equipment 87,480 317 1,605 8,286 8,680 2,036 91,044 Prepayments and assets under construction 82,797 808 3,370 180,558 320 -170,606 96,607 Property, plant and equipment 2,409,639 40,233 64,014 267,622 71,486 -13,121 2,696,901

Investment property 79,637 0 259 0 32,167 7,980 55,709

Investments in associates 62,938 -77 2,745 25 0 0 65,631

Investments in subsidiaries 6,195 -610 0 201 229 0 5,557 Other investments 19,561 817 261 7 596 0 20,050 Other financial assets 25,756 207 261 208 825 0 25,607 3,112,517 49,714 90,839 278,861 105,492 0 3,426,440

Note: Rounding differences may arise from the automatic processing of data. The following notes to the financial statements form an integral part of this table of fixed and financial assets.

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Depreciation

Change Foreign Carrying Carrying Balance on in consoli- exchange Current Balance on amount amount 1.1.2006 dation range incr./decr. year Write-up Disposals Transfers 31.12.2006 31.12.2006 31.12.2005 0 0 -34 3,534 0 0 0 3,500 604,333 532,040 18,686 -176 113 5,234 230 579 19 23,067 33,013 31,866 18,686 -176 79 8,768 230 579 19 26,567 637,346 563,906

257,066 -810 197 36,041 1 14,210 -1,771 276,512 676,908 604,543 873,413 -464 -3,804 124,349 1,309 20,359 2,491 974,317 866,377 774,228 59,092 -277 -146 9,812 1 3,444 -6,075 58,961 35,025 31,952 205 0 0 0 0 205 0 0 134,085 96,402 1,189,776 -1,551 -3,753 170,202 1,311 38,218 -5,355 1,309,790 1,712,395 1,507,125

22,725 0 -213 94 0 14,544 5,336 13,398 28,773 32,984

-40,872 -14 90 21 26,175 -3,676 0 -63,274 129,389 106,503

3,188 0 1 0 0 3,175 0 14 4,409 2,369 853 0-203 00 848 19,243 19,197 4,041 0 -1 0 3 3,175 0 862 23,652 21,566 1,194,356 -1,741 -3,798 179,085 27,719 52,840 0 1,287,343 2,531,555 2,232,084

Depreciation

Change Foreign Carrying Carrying Balance on in consoli- exchange Current Balance on amount amount 1.1.2005 dation range incr./decr. year Write-up Disposals Transfers 31.12.2005 31.12.2005 31.12.2004 0 0 0 00 00 0 532,040 490,568 12,484 -218 122 3,571 1 244 2,972 18,686 31,866 31,496 12,484 -218 122 3,571 1 244 2,972 18,686 563,906 522,064

225,825 9 3,854 32,450 598 10,575 6,101 257,066 604,543 558,082 791,383 -205 20,246 113,293 0 41,165 -10,139 873,413 774,228 664,072 54,658 -210 834 10,113 0 7,372 1,069 59,092 31,952 32,822 205 00 502-3205 96,402 82,592 1,072,071 -406 24,934 155,861 598 59,114 -2,972 1,189,776 1,507,125 1,337,568

24,766 0 18 272 0 2,331 0 22,725 32,984 54,872

-13,390 85 -58 0 29,513 -2,004 0 -40,872 106,503 76,329

3,921 -744 -1 12 0 0 0 3,188 2,369 2,274 0 853 0 0 0 0 0 853 19,197 19,561 3,921 109 -1 12 0 0 0 4,041 21,566 21,835 1,099,851 -430 25,015 159,716 30,112 59,685 0 1,194,356 2,232,084 2,012,668

91 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Segment Reporting

Segments Central-East Europe Central-West Europe North-West Europe in TEUR 2006 2005 2006 2005 2006 2005 Third party revenues 606,726 502,958 453,716 378,211 805,867 727,555 Inter-company revenues 9,281 4,320 15,496 7,198 21,680 20,377 Total revenues 616,007 507,278 469,212 385,409 827,547 747,932 Operating EBITDA 158,094 136,666 96,088 78,033 177,739 165,345 Depreciation and amortization 54,760 49,632 36,997 34,778 61,676 56,114 Operating EBIT 103,333 87,033 59,091 43,255 116,063 109,231 Income from investments in associates 3,498 5,028 0 364 -21 0 Investments in associates 23,507 20,077 1,823 1,823 69 90 Liabilities 549,281 525,967 365,586 327,378 1,071,777 1,021,731 Capital employed 624,259 569,505 453,823 396,293 1,058,900 952,855 Assets 1,052,288 872,918 650,291 552,466 1,620,210 1,517,959 Maintenance capex 28,028 22,799 18,991 15,047 34,230 36,161 Growth investments 105,627 99,570 81,998 46,883 117,492 77,392 Employees 4,612 4,767 2,151 2,002 4,213 4,203

Products Revenues Operating EBITDA Assets in TEUR 2006 2005 2006 2005 2006 2005 Hollow bricks 819,277 692,440 225,203 199,882 1,153,789 1,011,079 Facing bricks 810,743 778,636 135,769 138,407 1,194,563 992,005 Roofing systems 461,880 371,207 113,589 89,791 753,888 714,964 Pavers 124,789 104,913 20,714 18,387 170,175 136,301 Other 8,351 7,375 -23,374 -18,070 401,917 415,221 Wienerberger Group 2,225,040 1,954,571 471,901 428,397 3,674,332 3,269,570

Revenues Central-East Europe Central-West Europe North-West Europe in TEUR 2006 2005 2006 2005 2006 2005 Austria 80,694 80,458 Czech Republic 114,406 103,109 Hungary 102,106 91,587 Poland 151,700 109,688 Other Eastern Europe 157,833 118,133 15,840 9,082 Germany 311,450 234,963 Switzerland 72,141 70,878 Italy 70,523 72,827 Belgium 230,741 198,819 Netherlands 207,410 202,615 France 161,809 148,204 Great Britain 127,243 114,571 Scandinavia and Finland 63,258 55,083 USA Wienerberger Group 606,739 502,975 454,114 378,668 806,301 728,374

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USA Investments and Other Group Eliminations Wienerberger Group

2006 2005 2006 2005 2006 2005 2006 2005 349,535 337,179 8,280 7,306 0 0 2,224,124 1,953,209 0 0 13,385 12,909 -58,926 -43,442 916 1,362 349,535 337,179 21,665 20,215 -58,926 -43,442 2,225,040 1,954,571 63,354 66,423 -23,374 -18,070 0 0 471,901 428,397 15,188 14,591 3,702 2,997 0 0 172,323 158,112 48,166 51,833 -27,076 -21,067 0 0 299,577 270,285 704 715 21,973 23,406 0 0 26,154 29,513 4,348 4,112 99,642 80,401 0 0 129,389 106,503 388,786 307,201 1,515,748 1,457,693 -1,808,289 -1,853,504 2,082,889 1,786,466 437,586 345,006 23,584 25,782 0 0 2,598,152 2,289,441 517,054 436,419 3,138,091 3,010,223 -3,303,602 -3,120,415 3,674,332 3,269,570 16,994 12,872 1,999 1,333 0 0 100,242 88,212 125,043 26,606 0000430,160 250,451 2,483 2,194 180 161 0 0 13,639 13,327

Capital Employed Total Investments

2006 2005 2006 2005 832,140 778,060 170,986 132,965 990,411 841,865 222,941 99,153 602,080 538,539 93,670 88,182 149,937 105,195 40,806 17,030 23,584 25,782 1,999 1,333 2,598,152 2,289,441 530,402 338,663

USA Investments and Other Wienerberger Group

2006 2005 2006 2005 2006 2005 8,351 7,375 89,045 87,833 114,406 103,109 102,106 91,587 151,700 109,688 173,673 127,215 311,450 234,963 72,141 70,878 70,523 72,827 230,741 198,819 207,410 202,615 161,809 148,204 127,243 114,571 63,258 55,083 349,535 337,179 349,535 337,179 349,535 337,179 8,351 7,375 2,225,040 1,954,571

93 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Notes to the Financial Statements

Reporting in accordance with International Financial Reporting Standards (IFRS) These financial statements were prepared in keeping with § 245a of the Austrian Corporate Code and in accordance with the guidelines set forth in International Financial Reporting Standards (IFRS) and the Interpretations of the International Financial Reporting Interpretations Committee (IFRIC), which were in effect as of the balance sheet date and were adopted by the European Union (EU).

General Information

1. Basis of Preparation Wienerberger is an international building materials group; the headquarters of the parent company are located in Vienna, Austria. The business activities of the Group can be classified in five segments: Central-East Europe, Central-West Europe, North- West Europe and the USA as well as Investments and Other. The consolidated financial statements of Wienerberger AG and its subsidiaries reflect International Financial Reporting Standards (IFRS) valid for the 2006 business year.The new IFRS 7 Financial Instruments: Disclosures (valid as of 2007) and IFRS 8 Operating Segments (valid as of 2009) were not applied in advance.

Independent auditors have examined the annual financial statements of all national and international companies which require a statutory audit or have submitted to a voluntary audit in accordance with IFRS. The financial statements of all consolidated companies are based on historical acquisition and production costs, and were prepared as of the balance sheet date. To simplify presentation, certain items on the balance sheet and income statement were grouped together.The notes provide detailed information on all such items in accordance with IFRS.

2. Consolidation Range An overview of fully or proportionally consolidated companies and companies valued at equity is provided in the List of Companies at the end of the notes.

In addition to Wienerberger AG, the 2006 financial statements include 13 (2005: 14) Austrian and 108 (2005: 105) foreign subsidiaries in which Wienerberger AG has management control or directly or indirectly owns the majority of shares. Twenty-four (2005: 33) affiliates, whose influence on the asset, financial and earnings position of the Group is immaterial, were not included in the consolidation. The combined revenues, income, liabilities and assets of these unconsolidated companies equal less than 2% of the relevant figures for the Group.

Twelve (2005: 12) joint venture companies in the Schlagmann and Bramac Groups, which are under common management, were consolidated using the proportional method.

The equity method is used for consolidation in cases where the Wienerberger Group holds between 20 and 50% of the shares (associates), if these entities are considered significant for the preparation of a true and fair view of the Group’s assets, financial and earnings position. The carrying value of the seven companies consolidated at equity totals TEUR 129,389, and TEUR 96,993 of this amount is attributable to the Pipelife Group.

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The consolidation range developed as follows during the 2006 reporting year:

Fully Proportionally Equity Consolidation Range consolidated consolidated accounting Balance on 31.12.2005 119 12 7 Change in consolidation method 1 0 0 Included during reporting year for first time 14 0 1 Merged/liquidated during reporting year -12 0 -1 Divested during reporting year -1 0 0 Balance on 31.12.2006 121 12 7 Thereof foreign companies 108 10 5

The following table shows the pro rata values for joint ventures included in the financial statements at their proportional share:

in TEUR 2006 2005 Revenues 104,904 89,144 EBITDA 24,768 20,826 EBIT 19,426 15,817

Assets Equity and Liabilities in TEUR 31.12.2006 31.12.2005 in TEUR 31.12.2006 31.12.2005 Non-current assets 59,574 61,813 Equity 43,834 47,582 Current assets 28,637 28,707 Non-current provisions and liabilities 16,600 16,041 Current provisions and liabilities 27,777 26,897 88,211 90,520 88,211 90,520

Following are the proportional values for companies valued at equity (Pipelife Group and Tondach Gleinstätten Group):

in TEUR 2006 2005 Revenues 440,487 404,457 EBITDA 51,130 49,548 EBIT 33,460 31,374

Assets Equity and Liabilities in TEUR 31.12.2006 31.12.2005 in TEUR 31.12.2006 31.12.2005 Non-current assets 131,594 130,863 Equity 121,737 102,306 Current assets 180,045 162,527 Non-current provisions and liabilities 62,770 67,148 Current provisions and liabilities 127,132 123,936 311,639 293,390 311,639 293,390

95 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 3. Acquisitions and Disposals The following acquisitions made during 2006 are included in the consolidation for the first time:

Name of Company Share in % Name of Company Share in % Wienerberger Cermegad Sp. z. o.o. 100.00 Wienerberger Zeslawice Sp. z o.o. 59.34 Wienerberger Cegielnie Kraków S.A. 100.00 Uspeh AD 97.59 Bayrische Dachziegelwerke Bogen GmbH 100.00 Ampe Steenbakkerijen NV 100.00 Robinson Brick Company 100.00 Robinson Brick Company-Billings LLC 100.00 Robinson Brick Company-Block LLC 100.00 Robinson Brick Company-Aucutt’s LLC 100.00 Robinson Brick Company-Northern LLC 100.00 Colorbeton a.s. 75.00 Curley Building Material, Inc. 100.00

The changes in the consolidation range since December 31, 2005 involved the following initial consolidations and deconsolidations:

Wienerberger acquired the Polish Biegonice Group with two hollow brick plants in Southern Poland in early February.As of May 1, 2006 the Group acquired 100% of the shares in Bayrische Dachziegelwerke Bogen GmbH with one clay roof tile plant in Germany and 100% of Ampe Steenbakkerijen NV with one hollow brick plant in Belgium. On June 13, 2006 the control of the Robinson Group, which is headquartered in Denver, Colorado, was transferred to the Wienerberger Group. The purchase price for this company (debt-free) was TEUR 95,547. Robinson operates one facing brick plant, three concrete block factories and a number of retail centers in the western region of the USA. As of October 1, 2006 the Semmelrock Group, a member company of the Wienerberger Group, acquired 100% of the Czech Colorbeton a.s., which operates three production facilities in the Czech Republic.

During the reporting year the Wienerberger Group not only completed acquisitions (share deals), but also purchased the following brick plants (asset deals): on May 1, 2006 a hollow brick plant in Blindenmarkt, Austria, on August 1, 2006 two clay roof tile plants from Jungmeier in Straubing, Germany, and on December 1, 2006 a clay paver plant from Penter Klinker Klostermeyer KG in Bramsche, Germany. These asset deals are shown as additions to assets and not reported as changes in the consolidation range.

The brick activities of Wienerberger in Ukraine, which were not consolidated in previous years, were included in the consolidation for the first time in 2006.

On August 17, 2006 Wienerberger announced a cash purchase offer for the shares of Baggeridge Brick PLC, a company traded on the London Stock Exchange. This offer will only take effect after the transaction has been approved by the UK Competition Commission. Baggeridge is number four on the British market with five facing brick plants and 575 employees, and recorded revenues of TGBP 54,954 and EBITDA of TGBP 7,663 for the past business year (balance sheet date 30.06.2006). This offer has no effect on the annual financial statements of the Wienerberger Group for 2006.

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Companies included in the consolidation for the first time generated TEUR 75,907 of revenues and TEUR 9,465 of EBITDA for the period from January 1, 2006 to December 31, 2006.

Changes to the consolidation range in 2006 also include the effect on revenues and earnings of the first full-year consolidation of von Müller Dachprodukte GmbH & Co. KG (initial consolidation as of April 1, 2005) and the acquisition of 100% of the shares in Petersminde Denmark (initial consolidation during the third quarter of 2005).

The shares in Wienerberger Ofenkachel GmbH & Co KG were sold and the investment was deconsolidated as of December 31, 2006. In these financial statements the company is included in the income statement for the full year, but not in the balance sheet as of December 31, 2006.

All changes in the consolidation range had a net impact of TEUR 78,521 on revenues and TEUR 8,639 on EBITDA.

Companies included for the first time were consolidated at the point of acquisition or at the next balance sheet date, unless this led to a material impact compared to inclusion at the point of acquisition.

The effect of changes in the consolidation range on the income statement and balance sheet is as follows for 2006 (from/as of the date of initial consolidation or deconsolidation):

in TEUR 2006 Revenues 78,521 EBITDA 8,639 EBIT 4,521

Assets Equity and Liabilities in TEUR 31.12.2006 in TEUR 31.12.2006 Non-current assets 137,620 Non-current provisions and liabilities 4,737 Current assets -113,774 Current provisions and liabilities 19,109 23,846 23,846

4. Basis of Consolidation For included subsidiaries and proportionally consolidated joint ventures, the book value method is used to eliminate the investment and equity. Under this method, the acquisition value of the investment is compared with the revalued shareholders’ equity on the date of initial consolidation (purchase accounting). Any identifiable difference between the acquisition cost and revalued equity is added to fixed assets; any remaining goodwill, which represents compensation to the seller for market and development opportunities that are not specifically identified, is recognized as an asset in local currency under the relevant segment (TEUR 84,632 for the reporting year). In accordance with IFRS 3 Business Combinations, goodwill from acquisitions is no longer amortized on a regular basis but subject to an annual impairment test and only written down if the asset has been impaired. Impairment charges of TEUR 3,534 were recognized for the segment North-West Europe in 2006.

97 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Changes in the consolidation range in 2006 resulted in negative differences of TEUR 1,853, which were recognized to the income statement.

For associates consolidated at equity, the same basic methodology applied to subsidiaries and joint ventures is used to consolidate shareholders’ equity. For companies consolidated using equity accounting, local valuation methods are maintained if the relevant amounts are immaterial.

All receivables and liabilities, revenues, and other income and expenses arising between companies consolidated at 100% or their proportional share are eliminated. Discounts and other unilaterial transactions affecting profit and loss are eliminated and charged to the income statement. Deferred taxes are recorded to reflect the income tax effects of consolidation entries charged to the income statement.

Inter-company gains and losses, which arise from the sale of goods or services between Group companies and which affect fixed or current assets, are eliminated unless they are immaterial.

5. Foreign Exchange Translation The accounts of foreign companies are translated into the euro based on the functional currency method. The relevant local currency is the functional currency in all cases since these companies operate independently from a financial, economic, and organizational standpoint. With the exception of the component parts of shareholders’ equity, all balance sheet items are translated using the closing rate on December 31, 2006. Goodwill is recorded as an asset in local currency and also translated at the closing rate on the balance sheet date for the financial statements. Expense and revenue items are translated at the average exchange rate for the year.

Unrealized foreign exchange translation differences arising from non-current Group loans are offset against the translation reserve with no impact on the income statement.

Translation risk arising from the Group’s brick activities in the USA, Great Britain and Eastern Europe is limited by foreign currency swaps. These transactions involve the conclusion of a foreign currency-euro swap equal to the value of the assets held in the foreign currency.The translation risk associated with brick activities in Poland and Great Britain is covered to 56% and 85%, respectively, by foreign currency swaps and foreign currency futures. The translation risk arising from the US dollar based assets is covered to more than 100%.

During the reporting year, translation losses of TEUR 30,110 (2005: TEUR -66,593) were charged to equity with no effect on the income statement. The recording of foreign currency transactions (hedging transactions) that were not recognized to the income statement led to an increase of TEUR 12,520 in retained earnings. Translation gains and losses arising from the use of different exchange rates for the balance sheet (exchange rate on the balance sheet date) and income statement (average exchange rate for the year) are charged or credited to equity.

The major exchange rates used for foreign exchange translation showed the following development during the reporting year:

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Closing rate on Average rate for the year in EUR 31.12.2006 31.12.2005 2006 2005 100 British Pound 148.36795 145.92149 146.66586 146.22527 100 Danish Krone 13.41031 13.40393 13.40642 13.41948 100 Croatian Kuna 13.60267 13.56677 13.65309 13.51375 100 Norwegian Kroner 12.14772 12.52348 12.42563 12.48323 100 Polish Zloty 26.09263 25.90674 25.67042 24.85658 100 Romanian Lei 29.57705 27.17244 28.38295 27.61400 100 Swedish Krona 11.06219 10.65133 10.81146 10.77407 100 Swiss Franc 62.16586 64.30455 63.56688 64.58462 100 Slovakian Koruna 2.90318 2.63992 2.68810 2.59075 100 Slovenian Tolar 0.41729 0.41753 0.41737 0.41742 100 Czech Koruna 3.63769 3.44828 3.52978 3.35783 100 Hungarian Forint 0.39777 0.39546 0.37855 0.40313 100 US Dollar 75.76906 84.76731 79.30057 80.36759

6. Significant Accounting Policies The accounting and valuation methods used by the Group remain unchanged from December 31, 2005.

Wienerberger continues to follow the method used in the previous year and records free CO2 emission rights granted under EU Emissions Trading Directive 2003/87/EC at a purchase price of zero based on IAS 20 and IAS 38. Under this method, the income statement only includes expenses for the purchase of additional certificates or income from the sale of unused certificates.

The Cash Flow Statement was expanded to better meet the requirements of IAS 7, and profit before tax now forms the starting point. Interest and tax payments are shown separately as components of gross cash flow. The necessary adjustments are included under cash flow from operating activities and cash flow from financing activities. Prior year data was adjusted accordingly in the relevant positions.

The consolidated financial statements were prepared in accordance with the following principles:

Realization of revenue and expenses: Revenue arising from the provision of goods or services is realized when all major risks and opportunities arising from the delivered object have been transferred to the buyer. Operating expenses are recognized when a service is rendered or a delivery is received, or at the point such liability is incurred.

Order backlog: Information on the order backlog is irrelevant for an analysis of the business activities of Wienerberger AG. Therefore, this information is not provided.

Tangible and intangible assets: Fixed assets and purchased intangible assets are recorded at production or acquisition cost, less straight-line depreciation or usage-based depletion (clay pits). Production costs include direct expenses plus allocated material and production overhead. General selling and administrative expenses are not capitalized. The cost of debt incurred during the construction period of major new plants is capitalized. Depreciation is based on the useful economic lives of the various assets (component approach).

99 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 For the majority of assets, ordinary straight-line depreciation is calculated as follows:

Production plants (incl. warehouses) 25 years Kilns and dryers (facing bricks) 10 – 20 years Administrative buildings 40 – 50 years Other machinery 5 – 15 years Residential buildings 40 – 50 years Fittings, furniture and office equipment 3 – 10 years Kilns and dryers (roof tiles and hollow bricks) 8 – 15 years Other intangible assets 3 – 10 years

An impairment loss is recognized where necessary to reflect any significant and lasting decrease in value above and beyond ordinary depreciation. Repairs that do not increase the presumed useful life of assets are charged to current expenses. In accordance with IFRS 5, scheduled depreciation is discontinued when assets are classified as held for sale.

When plant or equipment is shutdown, sold or retired, the gain or loss arising from the difference between the proceeds on sale and remaining book value is recorded under other operating income or loss if the amount of the transactions reflects similar annually recurring events.

In accordance with IAS 17 Leases, leased fixed assets, which economically represent purchases financed with long-term funds (finance leases), are recorded at that price that would have been paid if the asset had been purchased. Amortization is calculated over the lesser of the useful life of the asset or the term of the lease. Obligations arising from future lease payments are recorded as liabilities.

Subsidies and investment grants (in particular, German investment subsidies) are recorded as liabilities and released in keeping with the useful life of the relevant asset.

In accordance with IAS 36 Impairment of Assets, assets are written down to the value in use or a possible sale price or liquidation value if there is evidence of impairment and the present value (discounted at a WACC rate of 7.5%) of future payment surpluses is less than book value. In the Wienerberger Group, cash-generating units generally represent groupings of plants. Future payment surpluses are based on internal forecasts, which are prepared in detail for 2007 and with minor simplifications for the following three years (2008, 2009 and 2010). The quality of these forecasts is evaluated on a regular basis through a variance analysis that compares this data with actual figures. The results of this analysis are reflected in the forecast for the following year. Future payment surpluses for the years 2011 to 2021 are based on the estimated payment surplus for 2010.Therefore, the calculation of the present value of payment surpluses is based on 15 reporting years.

The major factor for determining the value in use is formed by assumptions for the future development of the local market and sales volumes. The value in use is therefore determined on the basis of assumptions that are checked with economic researchers in the various regional markets, estimates published by Euroconstruct and values from past experience. Market growth rates may vary from –5 to +5% in a single year during the short-term planning period of four years; after this time, average market growth is generally assumed to range from 0 to +2%. Cost structure forecasts generally use past experience in the Wienerberger Group as a base for extrapolation.

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The carrying value of a fixed asset that was previously written down is increased to the recoverable amount if the reasons for impairment cease to exist or if a possible use is found for the item. In accordance with IFRS 3, goodwill that was subject to an impairment write-down in the past is not written up again.

Investment property is carried at depreciated cost.

Financial investments: Investments in associates are generally stated at equity, unless these investments are immaterial. Investments in other companies are valued at acquisition cost. A write-down is made if there are signs of lasting impairment. Write-downs and write-ups are shown under financial results.

Inventories: Inventories are stated at the lower of cost or net realizable value, whereby valuation is based on the moving average method. Cost includes direct expenses, allocated overhead, and depreciation based on normal capacity usage (between 85 and 100% of capacity ). Interest charges as well as selling and administrative expenses are not included in the production cost of current assets. Risks resulting from length of storage or other impairments in value are reflected in appropriate write-downs.

Receivables: Receivables and other current assets are stated at nominal value. Individually identifiable risks are reflected in specific provisions. Non-interest bearing receivables with a remaining term in excess of one year are recorded at discounted present value. Foreign exchange receivables in individual company accounts are translated at the exchange rate on the balance sheet date.

Securities are recorded at purchase price as of the date of acquisition, and stated at fair value in subsequent periods, based on stock exchange quotations as of the balance sheet date. Fluctuations in fair value are recognized to the income statement and included under financial results. Financial assets are recorded as of the trade date, which is the date the company becomes a party to the buy or sell contract.

Provisions: Provisions for severance payments - primarily for employees of the Austrian companies - are calculated according to financial principles based on a retirement age of 65 (men) and 60 (women), using a discount rate of 4%. The Austrian method “Teilwertverfahren” is used.

The Wienerberger Group has both defined contribution and defined benefit pension plans. Defined contribution plans carry no further obligation after the payment of premiums. Under defined benefit plans, the employee is promised a certain retirement benefit. The risk related to the actual retirement benefit is carried by the company up to the point of payment. The provisions for defined benefit pension plans are calculated according to the projected unit credit method. The valuation of pension commitments includes future wage/salary increases as well as increases in defined benefit commitments. In general these calculations are based on a discount rate that lies between 4.5% (Europe) and 5.75%, an expected increase of 2.5 – 5.0% in income, expected growth of 1.0 – 5.75% in pensions, average employee turnover of 2.0 – 5.0% and an expected return of 4.55 – 7.8% on plan assets. The provisions for pensions are calculated by actuaries.

Commitments by US companies to cover medical costs for retired employees are recorded under provisions for pensions because of their pension-like character.

101 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 The provisions for pensions were netted out with pension plan assets that are held to cover commitments. The market values of plan assets that exceed pension obligations are shown under other current receivables.

Significant actuarial gains and losses are not recognized to income in the year they arise, but are amortized over the remaining service time of active employees (corridor rule).

In agreement with IAS 12 (revised) the provision for deferred taxes includes all temporary valuation and accounting differences arising between financial statements prepared for tax purposes and IFRS financial statements. The provision for deferred taxes is calculated at the tax rate expected when these differences reverse in the future, based on the local tax rate of the relevant Group company. Future changes in tax rates are included if the relevant legal amendment has been passed as of the balance sheet date.

In accordance with IAS 16 (applicable as of January 1, 2005), provisions for site restoration are created when a clay pit is purchased. The underlying assumptions for site restoration provisions are primarily based on local conditions. The provisions for site restoration on clay pits purchased before 2005 are based on depletion, in accordance with the transition rule to IAS 16. Other liabilities whose due dates or amounts are uncertain are recorded as liabilities in accordance with IAS 37.

Liabilities: Liabilities are stated at the actual amount received, less transaction costs. Any premium, discount or other difference between the amount received and repayment amount is distributed over the term of the liability according to the effective interest rate method and recorded under financial results. Foreign currency liabilities are translated at the exchange rate on the balance sheet date.

Derivative financial instruments: Interest rate and foreign exchange swaps as well as foreign exchange contracts are recorded at purchase price as of the trade date, and shown at fair value in subsequent periods. The fair value of securities traded on a stock exchange is based on the actual market price. The fair value of interest rate swaps that are not traded on a stock exchange is based on the discounted value of future payments, which is calculated using a current market interest rate. The fair value of derivative instruments, which must be classified as hedging instruments under IAS 39 (above all, foreign currency swaps), are recorded with no impact to the income statement. The ineffectiveness on cash flow hedges is immaterial. For fair value hedges (above all, interest rate swaps) the value of the underlying transaction is adjusted by the fair value of the hedged risk, and this amount is recognized to the income statement.

Earnings per share: The calculation of earnings per share is based on Group profit after tax less minority interest, divided by the weighted number of shares outstanding (less treasury stock). As part of the stock option plan, Wienerberger managers were granted option rights.

Estimates: In preparing the Group financial statements, it is necessary to estimate certain figures and make assumptions that influence the recording of assets and liabilities, the declaration of other obligations as of the balance sheet date, and the recording of revenues and expenses during the reporting period. The actual figures, which become known at a later date, may differ from these estimates.

Segment reporting: In accordance with the “management approach”, the definition of business units for primary segment reporting must reflect the internal reporting structure. Therefore, Wienerberger structures its segments of business according to regions. EBITDA, EBIT, assets and capital employed as well as total investments are classified according to company headquarters. The secondary segment reporting provides information on the following product groups: hollow bricks, facing bricks, roofing systems, pavers and other.

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Transfer prices: The regional exchange of goods and services between the individual strategic segments is immaterial. Prices for the sale of goods between Group companies are established at arm’s length based on the resale price method. Prices for the provision of services between Group companies are established at arm’s length based on the cost-plus method.

Notes to the Income Statement

7. Revenues Consolidated revenues rose by 14% to TEUR 2,225,040. After an adjustment for changes in the consolidation range and excluding currency translation effects, organic growth totalled 10% (2005: 4%). In the Central-East Europe segment, all countries reported a significant improvement in revenues. The increase in revenues in Germany was supported by organic growth as well as the acquisition of several brick and clay roof tile plants. Revenues in Switzerland exceeded the 2005 level by a slight amount, but revenues in Italy fell slightly below the comparable prior year figure. The North-West Europe segment recorded a substantial increase in revenues, which was driven by organic growth as well as the purchase of the Ampe hollow brick plant in Belgium. Revenue growth in the USA resulted entirely from acquisitions; the market slump led to an organic decline. Foreign exchange rates had a positive impact of TEUR 1,772 on Group revenues, whereby positive effects from East European currencies were partly offset by a weaker US dollar. Detailed information on revenues by segment and region is provided under segment reporting on pages 92 and 93.

8. Material Expense and Depreciation The cost of goods sold, selling and administrative expenses include expenses for materials, maintenance, merchandise and energy totaling: in TEUR 2006 2005 Cost of materials 310,691 267,199 Maintenance expenses 136,524 120,653 Cost of merchandise 127,107 105,650 Cost of energy 315,987 250,364 Total 890,309 743,866

The reported expenses are reduced by income of TEUR 5,171 (2005: TEUR 8,301) from an increase in work in progress and finished goods inventories as well as the capitalization of costs related to the construction of qualified fixed assets.

In order to provide detailed data for analysis, maintenance expenses are shown separately. The prior year figure of TEUR 83,591, which was included under the cost of materials, was adjusted accordingly. In addition, the cost of services was split up into the following component items: maintenance of TEUR 37,062, environmental protection expenses of TEUR 8,096, services of TEUR 16,174, internal transportation of TEUR 9,516 and miscellaneous expenses of TEUR 2,932.

The cost of materials includes expenses for clay, sand, sawdust and other additives, pallets and packaging materials. Mainte- nance expenses involve the use of low-value spare parts as well as third party services. The cost of goods sold, selling expenses, administrative expenses, and other operating expenses include the following depreciation and amortization:

103 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 in TEUR 2006 2005 Ordinary depreciation 166,009 154,082 Extraordinary depreciation 2,780 4,030 168,789 158,112 Amortization of goodwill 3,534 0 Depreciation of plant, property and equipment and amortization of intangible assets 172,323 158,112

In accordance with IFRS 3 Business Combinations, goodwill is not amortized on a regular basis but subject to an annual impairment test (see 6. Significant Accounting Policies). The impairment charges recognized to goodwill during the reporting year represent valuation adjustments to the goodwill arising from the acquisition of the Optiroc Group in the North-West Europe segment. These adjustments involve the facing brick business in Denmark and Norway, where an impairment test revealed a need for a write-down because the recoverable amount of these activities was less than their carrying values. The impairment resulted from lower margin expectations over the long-term, which were related above all to an increase in production costs.

9. Personnel Expenses The cost of goods sold, selling and general administrative expenses include the following personnel expenses: in TEUR 2006 2005 Wages 213,850 201,051 Salaries 179,315 166,315 Expenses for stock option plans 2,181 1,250 Expenses for severance payments 6,735 5,415 Expenses for pensions 10,850 11,584 Expenses for mandatory social security and payroll-related taxes and contributions 95,408 82,323 Other employee benefits 11,517 18,545 Personnel expenses 519,856 486,483

The remuneration for the members of the Managing Board totaled TEUR 3,854 in 2006 (2005: TEUR 3,618). Of this amount, TEUR 2,186 represents a variable component and TEUR 1,668 a fixed component. For active members of the Managing Board, pension expenses in the form of contributions to pension funds (defined contribution plans) and the service costs for defined benefit plans totaled TEUR 1,212 (2005: TEUR 1,075). Payments of TEUR 595 (TEUR 589) were made to former members of the Managing Board or their surviving dependents.

The members of the Supervisory Board received remuneration of TEUR 295 for their activities during the reporting year (2005: TEUR 273). Compensation paid to the Supervisory Board for the 2005 Business Year (payment in 2006) was calculated as a percentage of profit after tax before minority interests. These funds are distributed among the members of the Supervisory Board (shareholder representatives) in accordance with the scope of their duties. For detailed information, see the remuneration report on page 32.

The company has not provided any guarantees for credits, and no companies in the Wienerberger Group have granted credits to the members of the Managing Board or Supervisory Board.

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The members of the Managing Board and Supervisory Board are listed on pages 20 and 26. The number of shares owned by the members of the Managing Board and Supervisory Board is listed on page 32. Detailed information on compensation paid to the members of the Managing Board and Supervisory Board is provided in the remuneration report on pages 30 to 32. Expenses arising from the stock option plans are shown on page 125.

10. Employees The average number of employees was as follows:

2006 2005

Thereof joint Thereof joint Total ventures Total ventures Production 9,526 456 10,051 440 Administration 1,151 76 1,111 73 Sales 2,962 177 2,165 166 Total 13,639 709 13,327 679 Thereof apprentices 63 2 39 3

Changes in the consolidation range led to an increase of 722 in the number of employees. Employees of companies included at their proportional share are reflected in this calculation in proportion to the holdings in these companies.

11. Other Operating Expenses The cost of goods sold, administrative and selling expenses include the following other operating expenses: in TEUR 2006 2005 Non-income based taxes 23,680 21,419 Loss on the disposal of fixed assets, excluding financial assets 4,949 3,102 Transportation costs for customer deliveries 110,490 109,794 Internal transport 79,583 55,350 Environmental protection measures 8,900 8,096 Uncollectible receivables 1,175 942 Services 117,001 105,961 Miscellaneous 71,702 57,531 Other operating expenses 417,480 362,195

In comparison to the prior year, other operating expenses are classified according to the type of expense. The prior year figures, which were classified according to the cost of sales method, were adjusted accordingly. A transition of expenses under the total cost method to expenses under the cost of sales method is provided on page 106.

The cost of services is comprised primarily of expenses for temporary personnel, business trips and travel, legal advising and consulting, advertising and telecommunications. Miscellaneous other expenses consist mainly of rents, commissions, patent and trademark rights, business entertainment as well as research and development. Research and development expenses at Wienerberger are limited to the cost of product development, process technology, the improvement of environmental standards and laboratory activities. The development costs for successful research programs are generally capitalized under the related asset. In 2006 research activities totaled TEUR 5,231 (2005: TEUR 3,595).

105 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 12. Other Operating Income In comparison to the prior year, other operating income is classified according to the type of income. The prior year figures, which were classified according to the cost of sales method, were adjusted accordingly.A transition of income and expenses under the total cost method to income and expenses under the cost of sales method is provided further below on this page (see 13.). in TEUR 2006 2005 Income from the disposal and write-up of tangible assets, excluding financial assets 14,617 12,261 Income from rental and leasing contracts 3,984 3,104 Subsidies 4,009 3,272 Insurance compensation 1,623 3,906 Miscellaneous 45,101 35,522 Other operating income 69,334 58,065

Miscellaneous other operating income represents sales-like revenues that are not part of the direct business activities of the Wienerberger Group.

13. Transition of Results according to Cost of Sales and Total Cost Method In an income statement prepared according to the cost of sales method, expenses are classified by functional area. Under the total cost method, the amounts for each individual category of expenses are shown and then adjusted to reflect the increase or decrease in finished and semi-finished goods in order to present the expenses related to the actual volume of goods sold. The relationship of these two methods is explained below, whereby the change in inventories and capitalization of construction costs for qualified assets are included under the cost of materials.

Cost of Cost of Cost of Cost of Personnel Other Other in TEUR freight materials merchandise Depreciation energy expenses income expenses Total Cost of goods sold 0 422,683 127,107 145,167 309,173 303,360 -8,079 104,293 1,403,704 Selling expenses 122,451 19,361 0 7,063 5,003 133,601 -3,007 125,449 409,921 Administrative expenses 0 0 0 9,276 760 82,622 -3,977 40,609 129,290 Other operating expenses 0 0 0 7,283 1,051 273 0 24,678 33,285 Other operating income 0 0 0 0 0 0 -54,271 0 -54,271 Amortization of goodwill 0 0 0 3,534 0 0 0 0 3,534 122,451 442,044 127,107 172,323 315,987 519,856 -69,334 295,029 1,925,463

14. Non-recurring Income and Expenses As a reaction to changed market conditions, the Wienerberger Group incurred TEUR 7,141 of restructuring expenses (thereof TEUR 6,741 in extraordinary write-offs) for the shutdown of two plants in the USA and one in Czech Republic during 2006. In order to improve comparability, these non-recurring expenses are shown separately under non-recurring write-offs and provisions for restructuring, and are therefore not included under ordinary operating expenses.

During the fourth quarter of 2006 a property in the south of Vienna area was sold at a book gain of TEUR 5,056 (proceeds on sale: TEUR 5,851). In the comparable prior year period, a book gain of TEUR 10,637 was recorded on sale proceeds of TEUR 15.670. The amount of this book gain and size of the property are not representative of the book gains generated by ordinary business activities. Therefore, the gain is shown separately under non-recurring income to improve comparability.

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15. Interest Result Interest result is comprised of the following: in TEUR 2006 2005 Interest and similar income 34,661 25,435 Interest and similar expenses -82,828 -68,861 Interest result -48,167 -43,426

16. Other Financial Results Other financial results include the following items: in TEUR 2006 2005 Income from subsidiaries -1,271 -633 Income from other companies 540 534 Total income from investments -731 -99

Market valuation of securities -703 2,713 Foreign exchange gains/losses 6,978 378 Bank charges and commitment charges -3,684 -7,369 Securities and other 2,591 -4,278 Other financial results 1,860 -4,377

The position bank charges and commitment fees include current expenses as well as the allocation of transaction costs that are related to the conclusion of credits or issue of bonds (above all, bank fees) over the term of the financing. The reversal of discounts and premiums is included under interest result.

17. Income Taxes This item includes income taxes paid and owed by Group companies as well as provisions for deferred taxes. in TEUR 2006 2005 Current tax expense 44,706 35,572 Deferred tax expense 14,292 19,262 Income taxes 58,998 54,834

The effective tax rate for the reporting year was 21.3% (2005: 21.8%). This rate is a weighted average of the effective local income tax rates of all companies included in the consolidation.

The difference between the current Austrian corporate tax rate of 25% (2005: 25%) and the Group tax rate shown in these statements is due to the following factors:

107 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 in TEUR 2006 2005 Profit before tax 277,339 251,267 Tax expense at tax rate 25% -69,335 -62,817 Other foreign tax rates -8,391 -9,398 Non-temporary differences as well as tax income and expense from prior periods 14,999 17,320 Change in valuation allowances for deferred tax assets and tax-loss carry-forwards 1,550 -807 Changes in tax rates 2,179 868 Effective tax expense -58,998 -54,834 Effective tax rate in % 21.3 21.8

18. Earnings per Share, Recommendation for the Distribution of Profits The current number of shares outstanding is 74,167,796. Wienerberger carried out a share buyback program from July 10 to July 21, 2006, primarily to service the stock option plans. This program resulted in the purchase of 250,000 shares. During the reporting year Wienerberger management exercised 305,000 options for Wienerberger shares from the 2003 stock option plan at a price of EUR 15.50 per share and 30,000 options from the 2002 plan at a price of EUR 18.00. These shares were drawn from treasury stock. As of December 31, 2006, 850,005 shares were held as treasury stock (2005: 935,005) and were deducted prior to the calculation of earnings per share. The resulting weighted average number of shares for the calculation of earnings per share in 2006 equaled 73,308,816.

Number of shares 2006 2005 Outstanding 74,167,796 74,167,796 Treasury stock 850,005 935,005 Weighted average 73,308,816 73,195,978

Based on consolidated net profit of TEUR 215,946 (2005: TEUR 194,353), earnings per share equal EUR 2.95 (2005: EUR 2.66). After an adjustment for non-recurring income and expenses of TEUR -2,085 (2005: TEUR -728) and impairment charges of TEUR 3,534 (2005: TEUR 0) to goodwill, earnings per share total EUR 3.02 (2005: EUR 2.67). Options from 2003, 2004, 2005 and 2006 lead to a dilution of earnings per share as defined in IAS 33 because the option price was lower than the market price on the balance sheet date. The dilution totaled 234,172 shares and led to a minimal reduction in earnings per share to EUR 2.94 (2005: EUR 2.64).

In accordance with the provisions of the Austrian Stock Corporation Act, the financial statements of Wienerberger AG as of December 31, 2006 form the basis for the dividend payment. These financial statements show a net profit of EUR 95,808,576.01. The Managing Board recommends the Annual General Meeting approve a dividend of EUR 1.30 per share, for a total payment of EUR 96,418,134.80 on issued capital of EUR 74,167,796, less a proportional share of EUR 1,105,006.50 for treasury stock, resulting in an amount of EUR 95,313,128.30. The Managing Board also recommends that the Annual General Meeting approve the carry forward of the remaining EUR 495,447.71.

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Notes to the Cash Flow Statement

The Cash Flow Statement for the Wienerberger Group shows the changes in cash and cash equivalents resulting from the inflow and outflow of funds during the reporting year. Cash and cash equivalents (liquid funds) include cash on hand and deposits with banks. Securities and current liabilities owed to financial institutions are not part of cash and cash equivalents. The effects of company acquisitions and disposals are eliminated and shown separately under net payments made for the acquisition of companies. Data from foreign Group companies are generally translated at the average exchange rate for the year. In contrast to this practice, cash and cash equivalents are valued at the exchange rate in effect on the balance sheet date.

19. Cash Flow from Investing Activities The acquisition of plant, property and equipment and intangible assets resulted in an outflow of funds totaling TEUR 360,659 (2005: TEUR 278,628). This amount includes TEUR 100,242 for maintenance, replacement rationalization and environmental protection investments (maintenance capex) as well as TEUR 260,417 for the construction or expansion of new plants and acquisitions (growth investments). Investments of TEUR 3,946 (2005: TEUR 233) were made in financial assets.

Cash inflows from the disposal of fixed and financial assets totaled TEUR 29,206 (2005: TEUR 61,398). These disposals generated gains of TEUR 13,183 (2005: TEUR 17,691).

Net payments made for the acquisition of companies totaled: in TEUR 2006 2005 Payments made for companies acquired 161,388 44,652 Cash from companies consolidated for the first time 742 -496 Acquisition of minority stakes 7,613 15,879 Cash outflows from deconsolidated companies 00 Net payments made for the acquisition of companies 169,743 60,035

Net payments of TEUR 169,743 (2005: TEUR 60,035) made for companies acquired include the purchase price for the proportional share of equity as well as any debt assumed in connection with the transaction (debt-free company).

The transition from total investments to maintenance capex and growth investments made by the Wienerberger Group is as follows:

109 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 in TEUR 2006 2005 Payments made for investments in tangible and intangible assets 360,659 278,628 Net payments made for the acquisition of companies 169,743 60,035 Total investments 530,402 338,663

Maintenance, replacement, rationalization and environmental investments 100,242 88,212 Maintenance capex 100,242 88,212

Payments made for new plant construction and renovation 260,417 190,416 Net payments made for the acquisition of companies 169,743 60,035 Growth investments 430,160 250,451

Notes to the Balance Sheet

20. Fixed and Financial Assets The development of fixed and financial assets is shown on pages 90 and 91. The effect of changes in the consolidation range is shown in a separate column. The figures shown for foreign exchange rate increases and decreases represent amounts arising from the use of different exchange rates to translate the assets of foreign companies at the beginning of the year and year-end.

Goodwill is distributed among the individual segments of business as follows: in TEUR 2006 2005 Central-East Europe 44,740 30,792 Central-West Europe 65,629 59,434 North-West Europe 298,198 289,252 USA 195,625 152,421 Investments and Other 141 141 Goodwill 604,333 532,040

Goodwill in the North-West Europe segment resulted primarily from the acquisition of business activities in Great Britain (TEUR 73,182) as well the roof tile business in Belgium, the Netherlands and France (total: TEUR 187,776). In the USA goodwill arose from the purchase of General Shale (TEUR 138,157) and the Robinson Group (TEUR 57,468). Non-current assets include land with a value of TEUR 296,103 (2005: TEUR 267,751). Capitalized interest expense and foreign currency differences on new plant construction totaled TEUR 3,040 in 2006 (2005: TEUR 1,005). Of total non-current assets, TEUR 1,021 (mainly land) meet the criteria defined in IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, whereby the sale of these assets within one year is highly probable.

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In addition to operating leases, the Wienerberger Group also uses finance leases to a limited extent. Fixed assets include the following plant and equipment from finance leases: in TEUR 2006 2005 Acquisition costs 32,514 29,350 Depreciation (accumulated) 9,466 10,715 Book value 23,048 18,635

Obligations arising from operating leases, license agreements and rental contracts for the use of fixed assets not shown on the balance sheet represent liabilities of: in TEUR 2006 2005 For the following year 18,249 14,550 For the next two to five years 66,251 46,660 Over five years 19,618 19,399

Payments arising from operating leases, license and rental agreements totaled TEUR 34,120 (2005: TEUR 29,089).

The balance sheet item investment property includes real estate and buildings with a book value of TEUR 28,773 (2005: TEUR 32,984),which are not used in current business operations. These assets are scheduled for sale over the middle to long-term, and are therefore classified as investment property. Based on comparable transactions, the present value of these assets is estimated at TEUR 39,917 (2005: TEUR 43,456). This property generated rental and other income of TEUR 12 in 2006 (2005: TEUR 261). During the 2006 business year, real estate classified as investment property with a book value of TEUR 6,439 was sold.

21. Inventories in TEUR 2006 2005 Raw materials and consumables 77,677 65,214 Semi-finished goods 84,259 66,435 Finished goods and merchandise 346,337 313,068 Prepayments 1,570 1,162 Inventories 509,843 445,879

In contrast to the prior year, palettes are no longer classified as finished goods and merchandise but are recorded under raw materials and consumables. The prior year figures were adjusted by TEUR 15,791. Beginning in 2006 purchased clay is no longer recorded under raw materials and consumables but reported together with clay mined by the group under semi-finished goods. The prior year figures were adjusted by TEUR 19,584. Valuation adjustments totaling TEUR 6,796 (2005: TEUR 5,252) were recorded to products where the net realizable value (selling price less selling and administrative expenses) was less than the acquisition or production cost.

111 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 22. Receivables and Other Assets All necessary individual valuation adjustments were made to receivables and other assets. In 2006 valuation adjustments totaled TEUR 1,175 (2005: TEUR 942). Individual valuation adjustments made to receivables during the reporting year represent less than 1% of total receivables and are therefore not shown separately.

Receivables 2006 2005 Remaining Remaining Remaining Remaining in TEUR Total term <1 year term >1 year Total term <1 year term >1 year Trade receivables from third parties 221,710 221,110 600 183,179 183,007 172 Trade receivables from subsidiaries 615 615 0 1,228 1,228 0 Trade receivables 222,325 221,725 600 184,407 184,235 172 Financial receivables from subsidiaries 11,456 11,456 0 12,556 8,042 4,514 Receivables arising from loans 12,408 2,663 9,745 12,469 3,044 9,425 Fair value of pension plan assets in excess of pension obligations 9,461 9,461 0 9,054 9,054 0 Other prepaid expenses 7,338 7,338 0 6,286 6,286 0 Miscellaneous 74,969 58,803 16,166 63,202 47,280 15,922 Other current receivables 115,632 89,721 25,911 103,567 73,706 29,861 Receivables 337,957 311,446 26,511 287,974 257,941 30,033

Receivables due from subsidiaries and affiliates are related primarily to loans. Trade receivables totaling TEUR 12,737 (2005: TEUR 9,936) are secured by notes receivable.

23. Capital and Reserves The development of capital and reserves during 2006 and 2005 is shown on page 89.

Efficient capital structure management is a key goal of Wienerberger, whereby the composition of the capital structure is closely linked with the capital-intensive nature of the brick and roof tile business. Activities in this financial area are designed to guarantee a sufficient equity base to safeguard the continued existence of the Company, to finance expansion and permit the payment of dividends, while maintaining the current Standard & Poor’s BBB and Moody’s Baa2 ratings. In this respect, the key indicators for Wienerberger are net debt / EBITDA and EBITDA / net interest (interest cover). The goal of Wienerberger is to hold the net debt / EBITDA ratio below 3.25 years: on December 31, 2006 this value equalled 2.5 (2005: 2.2). Interest cover was 9.8 at year-end 2006 (2005: 9.9) and significantly exceeded our target of 5.8, which represents the minimum value according to our financial guidelines.

Equity totalled TEUR 1,591,443 as of December 31, 2006, compared to TEUR 1,483,104 in the prior year.This growth was supported above all by an increase in retained earnings, which resulted from net profit recorded for the year. Retained earnings of TEUR 1,174,075 (2005: TEUR 1,031,209) include the retained earnings of Wienerberger AG plus the retained earnings of subsidiaries not eliminated during the capital consolidation. Group profit for 2006, excluding the share of profit due to minority interest, is shown under retained earnings.

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The issued capital of Wienerberger AG equals EUR 74,167,796 and is divided into 74,167,796 shares with zero par value. The Annual General Meeting on April 27, 2006 empowered the Managing Board to repurchase up to 10% of authorized share capital within a period of 18 months. Furthermore, the Annual General Meeting on May 11, 2004 passed a resolution that gives the Managing Board of Wienerberger AG the option to carry out a capital increase through the issue of up to 31,639,486 new shares. Any capital increase carried out within the framework of this authorization, which is valid for five years, must be approved by the Supervisory Board. In 2004 a total of 8,888,823 new shares were issued to finance the acquisition of Koramic Roofing and other growth projects. The Annual General Meeting on May 11, 2004 also authorized the Managing Board to issue up to 1,000,000 shares to serve the stock option plans over the next five years. This authorization has not been used to date.

Wienerberger will also continue its previous dividend policy in 2006 and plans to distribute approximately 44% (2005: 44%) of net profit for the reporting year.The Austrian Stock Corporation Act and the Articles of Association of Wienerberger AG contain provisions that – if approved by a qualified majority of shareholders at the Annual General Meeting – would permit a change in this dividend policy, the execution of capital increases or capital decreases, the start of share buyback programs, the modification of the investment program and/or the sale of assets in order to maintain an efficient capital structure.

Free float is distributed among Austrian and international investors (also see page 35), whereby three international funds each hold more than 5% of issued capital. Capital Research and Management, which is headquartered in Los Angeles, and the English Lansdowne Partners Limited in London, announced during August and September 2006 that they each hold more than 5% of Wienerberger shares. AIM Trimark Investments, a subsidiary of the Canadian investment company AMVESCAP PLC, has held more than 5% of the share capital of Wienerberger AG since November 2005. The Wienerberger share is traded in the Prime Market Segment of the Vienna Stock Exchange. In the USA, the share is traded in a Level 1 ADR Program of the Bank of New York on the OTC market.

24. Provisions Foreign Chg. in exchange consolida- in TEUR 1.1.2006 incr./decr. tion range Reversal Use Addition 31.12.2006 Provisions for severance payments 13,442 8 -255 323 1,327 1,676 13,221 Provisions for pensions 57,836 -1,220 1,021 636 7,814 5,824 55,011 Provisions for service anniversary bonuses 4,393 15 299 410 375 870 4,792 Employee-related provisions 75,671 -1,197 1,065 1,369 9,516 8,370 73,024 Provisions for deferred taxes 105,318 -4,177 0 1,995 1,343 12,766 110,569 Provision for warranties 22,347 96 906 1,010 4,219 7,453 25,573 Provision for site restoration 28,460 -83 751 1,142 2,220 3,192 28,958 Provision for environmental measures 2,656 2 653 130 839 1,217 3,559 Other non-current provisions 53,463 15 2,310 2,282 7,278 11,862 58,090 Non-current provisions 234,452 -5,359 3,375 5,646 18,137 32,998 241,683 Provisions for current taxes 703 0 0 0 52 4,788 5,439 Other current provisions 38,531 97 3,138 6,585 30,155 35,960 40,986 Current provisions 39,234 97 3,138 6,585 30,207 40,748 46,425 Provisions 273,686 -5,262 6,513 12,231 48,344 73,746 288,108

113 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 25. Provisions for Pensions Wienerberger has made pension commitments to selected managers as well as all employees in the Netherlands, Great Britain, the USA and Switzerland. Defined contribution plans represent the goal for future pension agreements. In 2004 a number of defined benefit pension agreements with active managers were converted to defined contribution pension models through the transfer of previously earned claims to a pension fund. Wienerberger has also made a number of defined pension commitments mainly to former managers, which are not tied to plan assets. The length of service forms the basis for retirement benefits. General Shale (USA) employees have a funded defined benefit pension plan as well as non-funded health insurance. The amount by which the fair value of pension plan assets exceeds pension obligations is shown under other receivables. ZZ Wancor (Switzerland) has a defined contribution pension plan through an external pension fund. Claims earned by Dutch employees are satisfied primarily through contributions to an industry-wide pension fund in the Netherlands. In Great Britain there is a defined contribution pension plan covering all employees. The member companies of thebrickbusiness, which was acquired during 2004, had a defined benefit model up to the end of 2003; a provision was created to reflect these obligations. In 2006 the provision for pensions was reduced by an extraordinary release of TEUR 3,080 to the income statement to reflect the discontinuation of part of the old defined benefit pension plans.

The most important actuarial parameters and relevant accounting principles are described on pages 101 and 102.

Total pension expenses for 2006 cover both defined contribution and defined benefit pension plans, and include the following components: in TEUR 2006 2005 Defined contribution plans Expenses for defined contribution pension plans 7,324 6,048 Defined benefit plans Service costs for defined benefit pension plans 6,024 3,962 Interest costs 9,308 9,787 Expected income from plan assets -8,087 -7,830 Actuarial gain/loss -3,674 1,410 Past service cost -45 46 Effect of plan curtailments and settlements 0 -1,839 Expenses for defined benefit plans 3,526 5,536 Total expenses for pensions 10,850 11,584

Gross pension obligations represent the present value of pension commitments as calculated by actuaries. Total pension obligations of TEUR 191,396 (2005: TEUR 196,765) include TEUR 174,402 (2005: TEUR 175,861) that are covered in part or in full by investments in funds (plan assets). The transition from gross pension obligations to net obligations as shown on the balance sheet is made by deducting non-recorded past service cost and actuarial gains and losses as well as the fair value of pension plan assets. Of the total net obligations, TEUR 12,947 are related to the US (retirement) health insurance program. The component parts of pension obligations and their coverage through plan assets are shown on the following page:

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Defined benefit obligation Fair value of plan assets in TEUR 2006 2005 2006 2005 Value as of 1.1. 196,765 182,240 134,906 112,769 Changes in consolidation range 923 1,710 0 0 Foreign exchange increase/decrease -3,039 11,787 -4,991 7,428 Service costs for defined benefit plans 6,024 3,962 0 0 Interest costs 9,308 9,787 0 0 Expected income from plan assets 0 0 8,087 7,830 Effects of plan curtailments and settlements 3 -2,682 3 -188 Actuarial gain/loss -11,938 -3,708 1,143 6,760 Past service cost 137 95 0 0 Payments to retirees -7,980 -7,411 -7,980 -7,411 Payments received from employees 1,193 985 1,193 985 Payments received from employers 0 0 8,017 6,733 Value as of 31.12. 191,396 196,765 140,378 134,906 Fair value of plan assets (funded) -140,378 -134,906 Present value of unfunded obligation as of 31.12. 51,018 61,859 Non-recorded past service cost 0 0 Non-recorded actuarial gains/losses (off-balance sheet risk) -5,468 -13,077 Net pension obligations recorded as of 31.12 45,550 48,782 Thereof provision for pensions (p. 113) 55,011 57,836 Thereof fair value of plan assets in excess of pension obligations (p. 112) 9,461 9,054

Pension plan assets are comprised of assets from the defined benefit pension plans in the USA and the Netherlands as well as from the former defined benefit pension plan in Great Britain. The expected return on plan assets in 2006 was TEUR 8,087 and the actual return was TEUR 9,230. The plan assets are invested in stocks (78%), bonds (14%) and other assets (8%).

Legal regulations grant Austrian employees the right to a lump-sum payment at retirement or termination by the employer, depending on the length of service. These future obligations are reflected in provisions for severance payments. There are similar obligations in France and Italy.

115 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 26. Provisions for Deferred Taxes Deferred tax assets and provisions for deferred taxes as of December 31, 2006 and December 31, 2005 are the result of the following temporary valuation and accounting differences between book values in the IFRS financial statements and the relevant tax bases:

2006 2005 Equity and Equity and in TEUR Assets liabilities Assets liabilities Intangible assets 887 -19,906 547 -16,211 Property, plant and equipment 20,586 -103,100 7,379 -104,522 Financial assets 0 -236 0 -412 Inventories 2,554 -7,940 2,518 -7,990 Receivables 3,307 -2,059 6,300 -4,430 Securities 109 -365 150 -206 Cash and cash at bank 0 -2 1 0 Prepaid expenses 1,394 -3,571 1,643 -4,321 28,837 -137,179 18,538 -138,093 Untaxed reserves 0 -11,342 0 -10,165 Provisions 22,019 -2,298 26,900 -873 Liabilities 7,851 -3,304 5,536 -3,613 Deferred income 25,968 -2,040 26,894 -2,092 55,838 -18,984 59,329 -16,744 Tax loss carry-forwards 80,895 83,643 Deferred tax assets/provisions 165,570 -156,163 161,510 -154,836 Valuation allowance for deferred tax assets -58,534 -50,637 Offset within legal tax units and jurisdictions -45,594 45,594 -49,518 49,518 Net deferred tax assets and provisions 61,442 -110,569 61,355 -105,318

In the Group financial statements, temporary differences and tax loss carry-forwards totaling TEUR 58,534 (2005: TEUR 50,637) are not reflected in deferred tax assets because their use as tax relief is not yet sufficiently certain.

In accordance with IAS 12.39, provisions for deferred taxes were not recorded on temporary differences related to shares owned in subsidiaries. The cumulative value of shares in subsidiaries is TEUR 104,813 less than the pro rata share of equity owned in subsidiaries (2005: TEUR 33,225).

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27. Liabilities The remaining terms of the various categories of liabilities are shown in the following table:

Remaining Thereof 2006 Remaining term 1-5 Remaining secured by in TEUR Total term <1 year years term >5 years collateral Interest-bearing loans 1,386,576 595,857 341,225 449,494 18,470 Finance leases 16,175 8,766 5,575 1,834 0 Financial liabilities owed to subsidiaries 1,990 1,990 0 0 0 Financial liabilities 1,404,741 606,613 346,800 451,328 18,470 Trade payables owed to third parties 200,152 200,058 94 0 0 Trade payables owed to subsidiaries 176 176 0 0 0 Trade payables 200,328 200,234 94 0 0 Prepayments received on orders 1,102 1,102 0 0 0 Amounts owed to tax authorities and social security carriers 45,232 44,983 42 207 0 Deferred income 35,298 12,000 12,474 10,824 0 Miscellaneous liabilities 108,080 83,349 12,700 12,031 0 Other liabilities 189,712 141,434 25,216 23,062 0 Liabilities as per balance sheet 1,794,781 948,281 372,110 474,390 18,470

Remaining Thereof 2005 Remaining term 1-5 Remaining secured by in TEUR Total term <1 year years term >5 years collateral Interest-bearing loans 1,163,439 88,963 617,010 457,466 5,102 Finance leases 23,181 6,291 16,334 556 0 Financial liabilities owed to subsidiaries 2,619 2,619 0 0 0 Financial liabilities 1,189,239 97,873 633,344 458,022 5,102 Trade payables owed to third parties 149,506 149,476 30 0 0 Trade payables owed to subsidiaries 1,206 1,206 0 0 0 Trade payables 150,712 150,682 30 0 0 Prepayments received on orders 1,330 1,330 0 0 10 Amounts owed to tax authorities and social security carriers 36,825 36,624 8 193 9 Deferred income 37,896 11,653 12,879 13,364 7 Miscellaneous liabilities 96,778 72,120 10,664 13,994 1 Other liabilities 172,829 121,727 23,551 27,551 27 Liabilities as per balance sheet 1,512,780 370,282 656,925 485,573 5,129

Collateral primarily represents mortgages on land and guarantee agreements.

Other liabilities include TEUR 47,309 (2005: TEUR 39,634) due to employees and TEUR 27,833 (2005: TEUR 19,051) of accruals for bonuses and other sales deductions due to customers. Deferred income includes TEUR 31,694 (2005: TEUR 34,308) of subsidies and investment allowances granted by third parties, which are released to the income statement over the useful life of the related assets.

117 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 28. Contigent Liabilities and Guarantees Contingent liabilities result from obligations to third parties, and are comprised of: in TEUR 31.12.2006 31.12.2005 Sureties 186 16 Guarantees 1,472 2,025 Obligations from bills of exchange 010 Other contractual obligations 48 410 Contingent liabilities 1,706 2,461

All contingent liabilities reflect possible future obligations whose existence can only be confirmed by the occurrence of a future event that is completely uncertain as of the balance sheet date. In some cases the minority shareholders of group companies hold put options, which allow them to sell their holdings to Wienerberger within a specified period of time at a predefined price. These put options are not recorded as financial instruments because there is no market value and another reliable estimate is not possible. The only financial obligations above and beyond these contingent liabilities and guarantees (off balance sheet risks) are the non-recorded actuarial losses arising from pension obligations (see page 115).

Financial Instruments

29. Financial Instruments

Securities 2006 2005

Book Market Ø Effective Book Market Ø Effective value value interest rate value value interest rate in TEUR in TEUR in % in TEUR in TEUR in % Shares in funds 5,168 5,168 1.44 15,942 15,942 4.21 Corporate bonds 10,542 10,542 5.49 30 30 Stock 7,576 7,576 13 13 Derivatives 16,524 16,524 4,390 4,390 Other 194 194 2,027 2,027 40,004 40,004 22,402 22,402

The nominal value of corporate bonds amounts to TEUR 10,406.

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Financial liabilities are comprised of the following items:

Currency Nominal value Market value Book value Effective in 1,000 local interest rate currency in TEUR in TEUR in %

Loans EUR 378,741 347,848 361,953 3.04 USD 9,508 7,204 7,204 6.23 355,052 369,157

Roll-over USD 8,400 6,365 6,365 8.25 6,365 6,365

Current loans EUR 413,885 413,576 413,456 3.81 CZK 45,000 82 82 7.10 SKK 95,000 346 346 5.00 USD 2,500 2,018 2,018 5.35 416,022 415,902 Fixed interest loans due to financial institutions 777,439 791,423

Currency Nominal value Market value Book value Effective in 1,000 local interest rate currency in TEUR in TEUR in %

Loans EUR 45,918 32,579 32,517 4.23 SIT 1,626,240 4,550 4,550 4.59 37,129 37,067

Roll-over EUR 2,463 2,463 2,463 3.95 DKK 0 238 238 1.25 HUF 165,079 656 656 7.83 3,357 3,357

Current loans EUR 160,544 149,389 148,876 4.72 CZK 28,030 428 428 3.78 Other 110 110 149,927 149,414 Variable interest loans due to financial institutions 190,413 189,838

Currency Nominal value Market value Book value Effective in 1,000 local interest rate currency in TEUR in TEUR in %

Bonds - fixed interest EUR 400,000 403,622 402,625 4.05 Roll-over - fixed interest EUR 3,045 2,463 2,463 5.00 Current loans - fixed interest EUR 223 227 227 3.20 Loans due to non-banks 406,312 405,315

In April 2005 Wienerberger issued a seven-year, fixed-interest, bullet repayment bond with a volume of TEUR 400,000, which is recorded under long-term borrowings. The related expenses of TEUR 10,139 (bank charges and interest rate hedges) were recorded together with the bond and not recognized to the income statement. The difference will be recognized as interest expense or bank charges over the term of the bond in accordance with the effective interest rate method. The book value of the bord contains crude interest of TEUR 10,535.

119 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Interest rates (variable, fixed) can be exchanged through the conclusion of interest rate swaps. The structure of financial liabilities (variable and fixed interest rates), including the effects of interest rate swaps, is shown on page 66.

30. Derivative Financial Instruments The fair value of forward exchange contracts is based on the market price as of the balance sheet date. The prices for comparable transactions are used to value certain OTC contracts. The fair value for interest rate swaps represents the value that the company would receive or be required to pay on termination as of the balance sheet date. Current market conditions, above all current interest rates and the credit standing of the swap partner are taken into account in the determination of value.

The interpretation of market information necessary for the estimation of fair values also requires a certain degree of subjective judgment. This can result in a difference between the figures shown here and values subsequently realized on the marketplace.

2006 2005

Currency Nominal value Market value Currency Nominal value Market value 31.12.2006 31.12.2006 31.12.2005 31.12.2005 in 1,000 local in 1,000 local currency in TEUR currency in TEUR

Forward exchange contracts EUR 86,103 -570 EUR 12,961 87 CZK 155,000 -5 DKK 54,300 8 DKK 65,800 3 GBP 24,961 152 GBP 16,492 -370 NOK 5,662 1 HUF 850,000 -43 SEK 5,300 -3 USD 118,809 -288 Interest rate swaps EUR 328,390 -8,652 EUR 383,805 -2,542 Cross currency swaps USD/EUR 530,870 48,398 USD/EUR 380,870 20,863 GBP/EUR 85,000 -2,030 GBP/EUR 85,000 493 PLN/EUR 417,270 -14,130 PLN/EUR 417,270 -13,612 CZK/EUR 800,000 -2,949 CZK/EUR 800,000 -907 CHF/EUR 25,000 43 CHF/EUR 25,000 -150 HUF/EUR 15,000,000 -2,883 16,524 4,390

Risk Report

The conduct of global operations exposes the business segments of the Wienerberger Group to a variety of risks that are inseparable from entrepreneurial activities. These risks and their potential impact on the Group are identified and analyzed by Wienerberger risk management, and suitable actions are taken based on the Group’s defined risk policy. From the current standpoint, there are no risks that could endanger the continued existence of the Group.

Market Risks Risks arise from developments in the major economies in which Wienerberger operates across Europe and the USA. The most important market segments for the Wienerberger Group are construction, in general, and new housing starts and renovation, in particular. A key parameter for the development of residential construction is the level of mortgage interest rates. In addition to this dependency on construction activity, bricks are subject to continuous competition from other wall and roofing materials.

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This competition on the building materials market requires specialized research and development of our primary products, bricks and clay roof tiles. In addition, the building materials industry is subject to seasonal fluctuations. As is the case with the entire building materials industry, the earnings of the Wienerberger Group are in part dependent on the weather. In order to avoid earnings fluctuations wherever possible, Wienerberger pursues a strategy of geographical diversification with parallel concentration on the core business. The Group’s activities are subject to the usual risks inherent in local markets, where positions must be continually protected against competitors and substitute products. Wienerberger’s most important customer group is the building materials trade sector, and further market adjustments in this branch are expected to increase pressure on prices in the future. Specific market situations can also have a negative impact on price levels, and Wienerberger therefore monitors its price strategy on a continuous basis.

Procurement, Production, Investment and Acquisition Risks The majority of the Wienerberger plants were constructed or modernized in recent years, and the risk of operating break- downs or longer loss of production is therefore low. Supplies of clay raw materials for the production of bricks and clay roof tiles are guaranteed on a lasting basis by sufficient deposits and long-term supply contracts.

Energy prices are dependent on international and local market developments. In 2006 energy costs for the Wienerberger Group totaled TEUR 315,987 (2005: TEUR 250,364), or 14.2% (2005: 12.8%) of revenues. These expenses are divided into 66% for natural gas, 22% for electricity, 7% for oil and 5% for coal and other materials. A sharp increase in the price of natural gas during the reporting year triggered an above-average rise in energy costs in relation to revenues. Wienerberger works to minimize the risk connected with rising energy prices on liberalized markets in Great Britain and the USA (in total, 16% of energy costs) by concluding futures contracts. In numerous East European countries (in total, 20% of energy costs), the prices for natural gas are regulated by the federal government and contracts with local suppliers are negotiated each year. In most of the EU countries (in total, 64% of energy costs) Wienerberger concludes agreements with national and international suppliers, in which prices are determined using formulas that are tied to substitute products (such as light heating oil and diesel oil). These prices are in part established for longer periods of time. Therefore, futures can be concluded as a hedge against risk using a link to these substitute products.

Excess capacity in specific markets can lead to increased pressure on prices which, in turn, can result in selling prices that fail to cover production and capital costs. Wienerberger therefore monitors production capacity on a continual basis, and adjusts this capacity by closing plants on a temporary or permanent basis or shifting production to more efficient facilities. Continuous optimization and both internal and external growth projects are required to increase the value of Wienerberger.The future profitability of these projects is dependent to a large degree on the investment volume and/or acquisition price. For this reason, all growth projects must meet the defined return on investment criteria for our bolt-on and external projects (also see the chapter Strategy and Business Model on page 37).

Financial Risks Operating activities expose Wienerberger to interest rate and exchange rate risks. Derivative financing instruments, in particular forward exchange contracts and interest swaps, are used to limit and control this risk. No derivative contracts are concluded for trading or speculative purposes.

The exposure of the Wienerberger Group to exchange rate risk is limited because of the local nature of the building materials business, which rarely involves exports or imports. Therefore, cash flows into or out of the euro region are almost entirely related to Group dividends or loans. The foreign exchange risk on these inter-Group cash flows is managed by the holding company. Risks may also arise from the translation of foreign company financial statements into the euro, which is the Group currency. Revenues, earnings, and balance sheet items of companies not headquartered in the euro region are therefore dependent

121 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 on the relevant euro exchange rate. Credit financing for the purchase of current assets is concluded in the local currency of the individual companies because of the decentralized structure of the Wienerberger Group. Foreign exchange risk is therefore reduced to a minimum, since the Group companies generally issue their invoices in local currency.

The following table shows Group revenues and capital employed by currency.The calculation of capital employed includes the effects of forward exchange contracts and foreign currency swaps:

2006 2005 Revenues in € mill. Share in % in € mill. Share in % Euro 1,085.2 49 958.8 49 East European currencies 541.9 24 431.6 22 US dollar 349.5 16 337.2 17 Other 248.4 11 227.0 12 Revenues 2,225.0 100 1,954.6 100

2006 2005 Capital Employed in € mill. Share in % in € mill. Share in % Euro 2,138.4 82 1,762.0 77 East European currencies 407.4 16 409.7 18 US dollar -54.5 -2 22.2 1 Other 106.9 4 95.5 4 Capital employed after hedging effect 2,598.2 100 2,289.4 100

Interest rate risk is comprised of two components: the optimal average term of all financing and the separation into fixed and variable interest rates. The risk associated with fixed interest rates lies in a possible decline in interest rate levels, while the risk associated with variable interest rates arises from the possibility of an increase in interest rates. In order to analyze interest rate risks (fixed and variable interest rates), financial liabilities (page 119) must be adjusted for the effects of derivative instruments (hedging) and short-term fixed-interest financial liabilities must be treated as variable-interest items.

2006 2005 Fixed Variable Fixed Variable in TEUR interest rate interest rate interest rate interest rate Interest-bearing loans 1,196,738 189,838 953,009 210,430 Reclassification of short-term loans with fixed interest rate -415,902 415,902 -29,254 29,254 Effect from derivative instruments (hedging) -271,739 271,739 -68,800 68,800 Interest-bearing loans after hedging effect 509,097 877,479 854,955 308,484

The credit risk associated with financing activities is immaterial because of the strict requirements of Wienerberger’s internal financial and treasury guidelines. The credit risk connected with the investment of liquid funds and securities is limited by the fact that virtually all securities held by the Group were issued by Austrian corporations and Wienerberger works only with financing partners who can demonstrate an excellent credit rating.

The assets held by defined benefit pension plans (TEUR 140,378) are invested in stocks (78%), bonds (14%) and other assets (8%) and are subject to normal market risk.

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The credit risk on trade receivables can be classified as low because the credit standing of new and existing customers is monitored on a continual basis. No trade receivables due from individual customers comprise more than 5% of total Group receivables. The liquidity of the operating companies is managed by Group Treasury.

Liquidity risk is relatively low because the brick and roofing systems businesses generate high cash flows. Gearing and the equity base form a limit for the possible expansive growth of the Wienerberger Group.

Legal Risks Depending on the market position in individual countries and the size of planned acquisitions, transactions may be dependent on the approval of cartel authorities. These procedures could lead to delays or, in individual cases, the prohibition of specific mergers or acquisitions. Wienerberger evaluates the cartel risk associated with an acquisition together with national and international legal and business experts during the early stages of work on a project in order to minimize this risk. No acquisitions planned by the Group have ever been prohibited by cartel authorities.

Due to the position of Wienerberger on individual regional markets, the pricing policy of Group subsidiaries is actively monitored by competition authorities. Price-fixing agreements are not part of Wienerberger business policies, and internal guidelines expressly prohibit such activities and call for sanctions in the event of violations.

Other Risks Wienerberger plants exceed current legal requirements for the prevention of environmental damage, but the intensification of environmental standards presents our engineering department with a continuous range of new challenges. The landfill business was transferred to a foundation in 2001, which considerably reduced the risk for Wienerberger AG from these activities. Legal commitments are identified and met through knowledge of the current legal and contractual situation as well as cooperation with experts and external consultants.

The risks associated with a breakdown of our centralized Group data processing system as the result of natural disasters have been minimized through the parallel installation of systems at facilities in different locations. In recent years, a number of building materials companies with operations in the USA became the subject of class action suits from patients with asbestos-related diseases. After an examination of our US activities, we have classified this risk as minimal because none of our American subsidiaries has ever produced or sold asbestos products.

Other Information

31. Significant Events occurring after the Balance Sheet Date (Supplementary Report) On February 9, 2007 Wienerberger AG issued a perpetual bond with a volume of TEUR 500,000, which is subordinated to all other creditors. The instrument carries a coupon of 6.50%, which can also be suspended if the dividend is not paid. After ten years Wienerberger AG, but not the creditors, may call the bond or extend the term at a higher variable interest rate. In accordance with IFRS, this hybrid bond is recorded under equity and coupons payable are not shown under financial results on the income statement, but as part of the use of earnings on the changes in equity statement.

123 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 On March 1, 2007 the Managing Board of Wienerberger AG decided to make use of the authorization granted by the 137th Annual General Meeting on April 27, 2006 and repurchase up to 300,000 of the Company’s shares during the period from March 7, 2007 to June 6, 2007. This share buyback will be carried out over the Vienna Stock Exchange at the current price of the stock, but up to a maximum price of EUR 88.70. Shares repurchased through this transaction will be used to service the stock option plan for management.

32. Related Party Transactions Transactions with companies in which members of the Supervisory Board of Wienerberger AG are active reflect third-party conditions and are immaterial in scope.

33. Stock Option Plan On May 8, 2002 the Annual General Meeting of Wienerberger AG authorized the use of Wienerberger AG treasury stock for a stock option plan. Based on this authorization, an option program was implemented for key managers who have a direct influence on the development of the company. After 2002, 2003, 2004 and 2005, options were granted for the fifth time during the 2006 business year.The number of options granted is dependent on the fulfillment of annual performance goals, with budgeted net income for the Group again forming the target for 2006. In order for the 2006 options to become valid, Group net profit must equal at least 95% of budget. If results fall between 95 and 100%, the options will be allocated on a proportional basis.

With the exception of the members of the Managing Board (see individual list), 13 key managers were each granted 5,000 options and 55 key managers were each granted 3,000 options in 2006. In comparison to the previous year, the conditions for the options were modified slightly, above all with respect to the exercise and retention periods. The options have a five-year time to maturity and can be exercised two years after they are granted (three years according to stock option plan 2006). After expira- tion of this two-year period, the options may be exercised within certain windows four weeks after the announcement of quarterly results. If the employee resigns during this two-year period, the options expire. The exercise price equals the average of all daily closing prices over a period of four weeks beginning with the announcement of preliminary results for the past reporting year, and totals EUR 38.50 for 2006. One-third of the shares that are purchased through the exercise of these options are subject to a 24-month retention period beginning on the date of exercise; the remaining shares are not subject to a retention period. The options are non-negotiable and non-marketable, and each option represents the right to purchase one share.

In order to serve the options granted in 2004, 2005 and 2006 as well as any options granted in subsequent years, the Annual General Meeting on May 12, 2005 approved the issue of authorized conditional capital as well as the purchase of treasury stock. Wienerberger carried out a share buyback program from July 10 to July 21, 2006, which resulted in the purchase of 250,000 shares. During the reporting year 30,000 options for Wienerberger shares from the 2002 stock option plan were exercised at a price of EUR 18.00 each and 305,000 options from the 2003 stock option plan were exercised at a price of EUR 15.50 each. These shares were drawn from treasury stock.

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The development of issued stock options is as follows:

2006 2005

Average Average Number of exercise price Number of exercise price Development of options options per option options per option Total at the beginning of the year 898,373 23.85 934,000 19.49 Options granted 293,000 38.50 187,373 37.50 Options exercised -335,000 15.72 -298,000 18.00 Options forfeited 0 0 0 0 Options subsequently accepted by employees 10,000 15.50 75,000 20.77 Total at the end of the year 866,373 31.85 898,373 23.85 Eligible for exercise at year-end 38,000 15.50 30,000 18.00

Number of options granted From 2006 From 2005 From 2004 From 2003 From 2002 Members of the Managing Board Wolfgang Reithofer 18,000 12,354 18,000 18,000 18,000 Heimo Scheuch 15,000 10,295 15,000 15,000 15,000 Hans Tschuden 15,000 10,295 15,000 15,000 15,000 Johann Windisch 15,000 10,295 15,000 15,000 15,000 Total for the Managing Board 63,000 43,239 63,000 63,000 63,000 Other key employees 230,000 144,134 300,000 335,000 335,000 Total number of options granted 293,000 187,373 363,000 398,000 398,000 Forfeited due to the end of employment 0 0 -15,000 -55,000 -70,000 Exercised options 0 0 0 -305,000 -328,000 Existing options 293,000 187,373 348,000 38,000 0 Eligible for exercise at year-end 0 0 0 38,000 0

Valuation of options From 2006 From 2005 From 2004 From 2003 From 2002 Major parameters for options granted

Market price at granting in EUR 42.20 33.86 27.53 17.32 18.97 Exercise price in EUR 38.50 37.50 25.00 15.50 18.00 Term of options in years 55555 Risk-free interest rate in % 3.32 3.15 3.90 3.17 3.74 Expected volatility in % 28 28 30 17 15 Present value of options in EUR 10.77 5.91 7.44 2.23 2.65

Fair value of stock options at grant date in TEUR 2,965 962 2,029 710 802

Included in personnel expenses for 2006 in TEUR 988 341 773 79 0

125 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 The options were valued based on the Black-Scholes option-pricing model. The interpretation of market information necessary for the estimation of market values also requires a certain degree of subjective judgment. The expected volatility was extrapolated based on the historical development of the price of the Wienerberger share. Therefore, the figures shown here may differ from the values subsequently realized on the marketplace.

Three members of the Managing Board exercised the options granted in 2003 during the reporting year.The resulting number of shares owned by these persons is presented in the remuneration report on page 32.

The Managing Board of Wienerberger AG released the consolidated financial statements on March 2, 2007 for distribution to the Supervisory Board. The Supervisory Board has the responsibility to examine the consolidated financial statements, and decide whether it will approve these consolidated financial statements.

Vienna, March 2, 2007

The Managing Board of the Wienerberger AG

Wolfgang Reithofer, Heimo Scheuch Hans Tschuden Johann Windisch CEO

126 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Financial Statements Notes to the Financial Statements Group Companies Service Group Companies

Company Headquarters Share capital Currency Interest Type of consolidation Notes

Wienerberger International NV Zaltbommel 50,000 EUR 100.00% VK Wienerberger Ziegelindustrie GmbH Hennersdorf 300,000,000 ATS 100.00% VK Wienerberger Teglaipari Rt. Budapest 2,140,000,000 HUF 100.00% VK Wienerberger Management Service Szolgáltató és Tanácsadó Kft. Budapest 3,000,000 HUF 100.00% OK 1) Wienerberger cihlarsky prumysl, a.s. Ceske Budejovice 961,543,960 CZK 100.00% VK Cihelna Kinsky, spol. s r.o. Kostelec nad Orlici 2,000,000 CZK 73.20% VK Wienerberger cihelna Jezernice, spol. s r.o. Ceske Budejovice 200,000 CZK 100.00% VK Wienerberger cihelna Brozany, spol. s r.o. Ceske Budejovice 75,000,000 CZK 100.00% VKE Wienerberger eurostroj, spol. s r.o. Ceske Budejovice 100,000 CZK 100.00% VK Wienerberger euroform, spol. s r.o. Ceske Budejovice 44,550,000 CZK 100.00% VK Wienerberger service, spol. s r.o. Ceske Budejovice 200,000 CZK 100.00% OK 1) SILIKE s.r.o. Ceske Budejovice 100,000 CZK 50.00% EQE Wienerberger Slovenske tehelne spol. s r.o. Zlate Moravce 100,000,000 SKK 100.00% VK Wienerberger Cegielnie Lebork Sp. z o.o. Warszawa 116,334,660 PLN 100.00% VK Handel Ceramika Budowlana Sp. z o.o. Warszawa 50,000 PLN 40.00% OK 1) Zeklad Ceramiki Budowlanej Stanislawów SP. z o.o Czestochowa 50,000 PLN 100.00% OKE 1) Wienerberger Honoratka Ceramika Budowlana S.A. Konin 20,187,000 PLN 77.79% VK Wienerberger Karbud S.A. Warszawa 17,081,200 PLN 100.00% VK Wienerberger Ceramika Budowlana Sp. z o.o. Warszawa 1,000,000 PLN 93.22% VK Wienerberger Osiek Sp. z o.o. Warszawa 10,008,000 PLN 100.00% VK Wienerberger Cermegad Sp. z. o.o. Warszawa 5,011,000 PLN 100.00% VKE Wienerberger Zeslawice Sp. z o.o. Warszawa 29,490,000 PLN 59.34% VKE Wienerberger Cegielnie Kraków S.A. Warszawa 7,637,686 PLN 100.00% VKE Glina Sp. z o.o. Warszawa 50,000 PLN 100.00% VK Glina Nowa Sp. z o.o. Warszawa 50,000 PLN 100.00% VK Koramic Pokrycia Dachowe Sp. z o.o. Warszawa 233,458,290 PLN 100.00% VK Wienerberger Ilovac d.d. Karlovac 8,988,040 HRK 99.92% VK Wienerberger Cetera IGM d.d. Karlovac 359,240 HRK 99.70% VK Wienerberger Industrija opeke d.j.l. Sarajevo 2,000 KM 100.00% VK Wienerberger Opekarna Ormoz d.d. Ormoz 228,130,000 SIT 87.27% VK Opekarna Pragersko d.d. Pragersko 245,262,000 SIT 83.71% VK Wienerberger EOOD Sofia 4,000,000 BGL 100.00% VK Uspeh AD Lukovit 300,000 BGL 97.59% VKE Agro Property Bulgaria EOOD Sofia 5,000 BGL 100.00% OK 1) Wienerberger d.o.o. Beograd 500 EUR 100.00% OKE 1) Wienerberger Sisteme de Caramizi S.R.L. Bucuresti 39,147,100 RON 100.00% VK OOO “Wienerberger Kirpitsch” Kirschatsch 469,423,261 RUR 100.00% VK Wienerberger Finanz-S.A. Luxembourg 12,208,670 USD 100.00% VK Wienerberger TOV Kyiv 162,484 EUR 100.00% VKE

127 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Company Headquarters Share capital Currency Interest Type of consolidation Notes

Semmelrock International GmbH Klagenfurt 3,000,000 EUR 75.00% VK Semmelrock Baustoffindustrie GmbH Klagenfurt 1,000,000 EUR 75.00% VK Semmelrock Industriebeteiligungsverwaltung GmbH Wien 35,000 EUR 75.00% VK Semmelrock Stein & Design Kft. Ocsa 983,000,000 HUF 75.00% VK Semmelrock Stein + Design Dlazby s.r.o. Sered 91,200,000 SKK 75.00% VK Semmelrock Stein & Design d.o.o. Ogulin 15,520,000 HRK 75.00% VK Semmelrock Stein & Design Sp. z o.o. Gliwice 11,800,000 PLN 75.00% VK Semmelrock Stein + Design S.R.L. Gura Ocnitei 9,423,320 RON 75.00% VK Semmelrock Tlakovci d.o.o. Ormoz 2,100,000 SIT 75.00% OK 1) Semmelrock Colorbeton a.s. Praha 2,000,000 CZK 75.00% VKE Semmelrock Stein + Design EOOD Sofia 5,000 BGL 75.00% OKE 1)

Bramac Dachsysteme International GmbH Pöchlarn 40,000,000 ATS 50.00% QU Bramac stresni systemy spol. s r. o. Praha 160,000,000 CZK 50.00% QU Bramac Dachsteinproduktion und Baustoffindustrie Kft. Veszprem 1,831,880,000 HUF 50.00% QU Bramac stresni sistemi d.o.o. Skocjan 910,000,000 SIT 50.00% QU Bramac Krovni Sistemi d.o.o. Beograd 750,000 EUR 50.00% QU Bramac Stresne Systemy spol. s r.o. Ivanka pri Nitre 173,835,000 SKK 50.00% QU Bramac Pokrovni Sistemi d.o.o. Novi Zagreb 7,778,000 HRK 50.00% QU Bramac Sisteme de Invelitori S.R.L. Sibiu 8,658,000 RON 50.00% QU Bramac pokrivni sistemi EOOD Silistra 846,200 BGL 50.00% QU Bramac Krovni Sistemi d.o.o. Sarajevo 2,000 DEM 50.00% QU

Wienerberger Ziegelindustrie GmbH Hannover 9,500,000 EUR 100.00% VK Argeton GmbH Bogen 1,600,000 EUR 100.00% VKE Schlagmann Beteiligungs GmbH Zeilarn 26,000 EUR 50.00% OK 1) Schlagmann Baustoffwerke GmbH & Co KG Zeilarn 10,300,000 EUR 50.00% QU Pro Massivhaus Service und Training GmbH Lanhofen 25,000 EUR 50.00% OK 1) Wienerberger Vermögensgesellschaft mbH Hannover 25,000 EUR 100.00% VK Wienerberger Systemschornstein GmbH & Co. KG Hannover 130,000 DEM 100.00% OK 1) Krauss Kaminwerke Verwaltungs-GmbH Hannover 26,000 EUR 100.00% OK 1) Ziegelwerk B GmbH Hannover 26,000 EUR 100.00% OK 1) Tongruben Verwaltungs GmbH Hannover 26,000 EUR 100.00% OK 1) TZ Tonabbau + Ziegelproduktion GmbH Hannover 26,000 EUR 94.23% VK von Müller Dachprodukte Verwaltungs-GmbH Hannover 25,000 EUR 100.00% OK 1) von Müller Dachprodukte GmbH & Co. KG Hannover 2,000,000 EUR 100.00% VK F.v. Müller Dachziegelwerke Görlitz GmbH Görlitz 500,000 DEM 100.00% OK 1) Megalith Bohemia s r. o. Slany, okr. Kladno 2,000,000 CZK 100.00% OK 1) Koramic Verwaltungs-GmbH Hannover 26,000 EUR 100.00% OK 1) Koramic Dachprodukte GmbH & Co. KG Hannover 5,000,000 EUR 100.00% VK

ZZ Wancor Regensdorf 1,000,000 CHF 100.00% VK ZZW Swissbrick AG Regensdorf 200,000 CHF 100.00% VK

Wienerberger Brunori SRL Bubano 4,056,000 EUR 100.00% VK Alaudae SRL Bubano 51,130 EUR 100.00% VK Wienerberger Tacconi SRL Roma 1,187,952 EUR 59.99% VK Fornaci Giuliane S.p.A. Cormons 1,900,000 EUR 30.00% EQ

128 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Financial Statements Group Companies Service

Company Headquarters Share capital Currency Interest Type of consolidation Notes

Wienerberger NV Kortrijk 102,736,187 EUR 100.00% VK Ampe Steenbakkerijen NV Pittem-Egem 2,500,000 EUR 100.00% VKE Syndikaat Machiensteen II NV Rumst 1,484,400 EUR 100.00% VK Terca Zonnebeke NV Zonnebeke 8,040,500 EUR 100.00% VK Terca Quirijnen NV Malle West 4,624,000 EUR 100.00% VK Deva-Kort NV Kortemark 247,894 EUR 100.00% VK Steenfabrieken Desimpel NV Kortrijk 12,102,410 EUR 100.00% VK Briqueterie de Peruwelz NV Kortemark 22,483,943 EUR 100.00% VK Desimpel Kortemark Industries NV Kortemark 350,000 EUR 100.00% VK Wienerberger Coordination Center NV Kortrijk 75,831,000 EUR 100.00% VK

Wienerberger B.V. Zaltbommel 25,457,070 EUR 100.00% VK Van Hesteren & Janssens B.V. Zaltbommel 363,024 EUR 100.00% VK Desimpel AK1 B.V. Amsterdam 70,000 EUR 100.00% VK BrickTrading Holland B.V. Zaltbommel 18,000 EUR 100.00% VK German Brick Trading B.V. Wijchen 249,700 EUR 100.00% VK Steenhandel Oost Nederland B.V. Rijssen 3,630 EUR 100.00% VK Aberson Bouwmaterialen B.V. Zwolle 59,899 EUR 100.00% VK Koramic Dachziegel Handels GmbH Brüggen-Niederrhein 25,565 EUR 100.00% EQ Steencentrale Neerbosch B.V. Wijchen 45,400 EUR 100.00% VK Leeuwis B.V. Wijchen 91,210 EUR 100.00% VK Handelsmaatschappij Rellingen B.V. Wijchen 136,134 EUR 100.00% VK Steinzentrale Nord GmbH Rellingen 52,500 EUR 100.00% VK Desimpel Klinker (Deutschland) GmbH Emmerich 25,000 EUR 100.00% VK Desimpel Klinker (Deutschland) GmbH & Co. KG Emmerich 50,000 EUR 100.00% VK

Galileo Brick Limited Cheadle 2,000,000 GBP 100.00% VK Wienerberger (UK) Limited Manchester 780,646 GBP 100.00% VK The Brick and Stone Company Limited Cheadle 5,000 GBP 100.00% VK Terca Reclaimed Buildings Materials Limited Cheadle 15,000 GBP 100.00% VK Wienerberger Limited Cheadle 1 GBP 100.00% VK Galileo Block Limited Cheadle 104,002 GBP 100.00% VK Galileo Block 2 Limited Cheadle 2 GBP 100.00% VK Chelwood Group Unlimited Cheadle 5,975,506 GBP 100.00% VK The Brick Business Limited Cheadle 900,002 GBP 100.00% VK The Ockley Brick Company Limited Cheadle 700 GBP 100.00% VK Chelwood Brick Limited Cheadle 890,850 GBP 100.00% VK Ambion Brick Company Limited Cheadle 6,698,797 GBP 100.00% VK Ockley Building Products Limited Cheadle 500,000 GBP 100.00% VK Irlam Brick Limited Cheadle 15,100 GBP 100.00% VK Galileo Trustee Limited Cheadle 1 GBP 100.00% VK DMWSL 320 Limited Cheadle 1 GBP 100.00% VK

Wienerberger Brick Industry Private Limited Bangalore 100,000 INR 99.99% OKE 1)

129 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Company Headquarters Share capital Currency Interest Type of consolidation Notes

Wienerberger Participations SAS Achenheim 36,000,000 EUR 100.00% VK Wienerberger SAS Achenheim 30,000,000 EUR 100.00% VK Pacema SAS Achenheim 3,800,000 EUR 100.00% VK Société du Terril d'Hulluch (STF) SNC Lens 300,000 EUR 50.00% OK 1) Desimpel Briques SAS Cauchy à la Tour 3,821,410 EUR 100.00% VK Koramic Tuiles SAS Recologne 10,000,000 EUR 100.00% VK Briqueterie et Carrieres Bar SA Flines Les Raches 513,000 EUR 52.10% OKE 1)

Wienerberger A/S Brøndy 107,954,000 DKK 100.00% VK Petersminde Teglvaerk A/S Stenstrup 1,700,000 DKK 100.00% VK Wienerberger AS Lunde i Telemark 43,546,575 NOK 100.00% VK Wienerberger AB Bjärred 17,550,000 SEK 100.00% VK Wienerberger OY AB Helsinki 1,000,000 EUR 100.00% VK Wienerberger AS Aseri 24,074,000 EEK 100.00% VK Terca OÜ Aseri Ida-Virumaa 40,000 EEK 100.00% OKE 1)

General Shale Brick, Inc. Johnson City 1,000 USD 100.00% VK General Shale Finance S.à.r.l. Luxembourg 12,500 EUR 100.00% OKE 1) General Shale Building Materials, Inc. Johnson City 1,000 USD 100.00% VK Robinson Brick Company Denver 118,509,708 USD 100.00% VKE Robinson Brick Company-Billings LLC Denver 0 USD 100.00% VKE Robinson Brick Company-Block LLC Denver 0 USD 100.00% VKE Robinson Brick Company-Aucutt's LLC Denver 0 USD 100.00% VKE Robinson Brick Company-Northern LLC Denver 0 USD 100.00% VKE Modern Concrete, LLC Louisville 1,000 USD 35.00% EQ Curley Building Material, Inc. Carmel 10,000 USD 100.00% VKE

Pipelife International GmbH Wr. Neudorf 29,000,000 EUR 50.00% EQ 2)

Wienerberger Dach Beteiligungs GmbH Wien 500,000 ATS 100.00% VK WIBRA Tondachziegel Beteiligungs-GmbH Wien 500,000 ATS 50.00% QU Tondach Gleinstätten AG Gleinstätten 500,000 EUR 25.00% EQ 3)

Wienerberger Beteiligungs GmbH Wien 1,000,000 ATS 100.00% VK Wienerberger Anteilsverwaltung GmbH Wien 35,000 EUR 100.00% VK Wienerberger Industriebeteiligungsverwaltung GmbH Wien 35,000 EUR 100.00% VK Wienerberger Finance Service B.V. Zaltbommel 18,000 EUR 100.00% VK Wienerberger Finanz Service GmbH Wien 25,435,492 EUR 100.00% VK Wienerberger France Holding GmbH Wien 35,000 EUR 100.00% VK Wienerberger ZZ Holding GmbH Wien 35,000 EUR 100.00% VK VVT Vermögensverwaltung GmbH Wien 36,000 EUR 100.00% VK WK Services NV Kortrijk 32,226,158 EUR 100.00% VK Keramo Wienerberger Steinzeugwerk Zwickau GmbH Zwickau 4,000,000 DEM 100.00% EQ Wienerberger Beteiligungs GmbH Hannover 26,000 EUR 100.00% OK 1)

VK ...... Full consolidation EQ..... Equity accounting 1) Immaterial VKE.... First time full consolidation EQE... First time equity accounting 2) Holding company of Pipelife Group QU ..... Proportional consolidation OK .... No consolidation 3) Holding company of Gleinstätten Group QUE ... First time proportional consolidation OKE .. No consolidation (first time)

130 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Financial Statements Group Companies Unqualified Opinion Service Unqualified Opinion

Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Wienerberger AG, Vienna, for the financial year from 1 January to 31 December 2006. These consolidated financial statements comprise the balance sheet as at 31 December 2006, and the income statement, statement of changes in equity and cash flow statement for the year ended 31 December 2006, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the EU. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with laws and regulations applicable in Austria and in accordance with International Standards on Auditing, issued by the Inter- national Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion Our audit did not give rise to any objections. Based on the results of our audit in our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the group as of 31 December 2006, and of its financial performance and its cash flows for the financial year from 1 January to 31 December 2006 in accordance with International Financial Reporting Standards as adopted by the EU. Report on Other Legal and Regulatory Requirements Laws and regulations applicable in Austria require us to perform audit procedures whether the consolidated management report is consistent with the consolidated financial statements and whether the other disclosures made in the consolidated management report do not give rise to misconception of the position of the group.

In our opinion, the consolidated management report for the group is consistent with the consolidated financial statements.

Vienna, March 7, 2007 KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

Rainer Hassler Martin Wagner Austrian Certified Public Accountant Austrian Certified Public Accountant

131 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Financial Statements of Wienerberger AG

2006 2005 Income Statement of Wienerberger AG in TEUR in TEUR Income from subsidiaries 128,674 120,543 Interest result -26,968 -22,062 Other financial result -3,746 -12,728 Income from financing activities 97,960 85,753 Revenues 42,568 37,870 Other operating income 18,740 23,718 Personnel expenses -19,739 -16,808 Depreciation -3,602 -2,757 Other operating expenses -34,519 -30,396 Profit on ordinary activities 101,408 97,380 Income taxes 6,855 2,065 Profit after tax 108,263 99,445 Reversal of untaxed reserves 278 3,490 Addition to reserves -13,000 -17,000 Profit carried forward 268 748 Net profit 95,809 86,683

The Annual Financial Statements of Wienerberger AG, which were prepared in accordance with Austrian generally accepted accounting principles, were audited by KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft and awarded an unqualified opinion. These Annual Financial Statements and all supplementary information will be filed with the Company Register of the Commercial Court in Vienna under Number 77676 f. Copies of these Annual Financial Statements are available free of charge directly from Wienerberger AG, 1100 Vienna, and will also be available at the Annual General Meeting.

Recommendation for the Distribution of Profits We recommend the Annual General Meeting approve the following proposal for the distribution of profits totaling EUR 95,808,576.01: payment of a dividend of EUR 1.30 per share on issued capital of EUR 74,167,796.00, or EUR 96,418,134.80 less a pro rata share for treasury stock of EUR 1,105,006.50, for a total distribution of EUR 95,313,128.30 and carry forward of the remaining EUR 495,447.71.

Vienna, March 2007

The Managing Board of Wienerberger AG

Wolfgang Reithofer, Heimo Scheuch Hans Tschuden Johann Windisch CEO

132 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Financial Statements Financial Statements of Wienerberger AG Service

31.12.2006 31.12.2005 Balance Sheet of Wienerberger AG in TEUR in TEUR Assets Intangible assets 17,384 19,805 Property, plant and equipment 27,663 30,526 Financial assets 2,058,936 1,937,692 Fixed and financial assets 2,103,982 1,988,023 Finished goods and merchandise 141 141 Trade receivables 10,355 14,571 Receivables from subsidiaries 416,415 471,418 Other receivables and assets 7,432 4,991 Securities and other investments 40,929 38,762 Cash and cash at bank 100,085 129,791 Current assets 575,357 659,674 Prepayments and deferred charges 2,405 2,844 Total Assets 2,681,744 2,650,541

Equity and Liabilities Issued capital 74,168 74,168 Share premium account 940,140 940,140 Retained earnings 387,574 374,574 Profit and loss account 95,809 86,683 Equity 1,497,691 1,475,565 Untaxed reserves 10,505 10,783 Provisions 60,105 37,520 Bonds 400,000 400,000 Interest-bearing loans 668,825 681,172 Trade payables 2,413 2,781 Liabilities to subsidiaries 8,021 8,844 Other liabilities 34,185 33,876 Liabilities 1,113,444 1,126,673 Total Equity and Liabilities 2,681,744 2,650,541

133 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 SERVICE

Addresses of Major Companies

Headquarters: Wienerberger AG A-1100 Vienna, Wienerberg City, Wienerbergstrasse 11 T +43 (1) 60 192-0, [email protected], www.wienerberger.com

Operating companies: Wienerberger Wienerberger Sisteme Wienerberger NV Wienerberger OY AB Ziegelindustrie GmbH de Caramizi S.R.L. B-8500 Kortrijk FIN-00380 Helsinki A-2332 Hennersdorf RO-050557 Bucuresti Ter Bede Business Center Strömberginkuja 2 Hauptstrasse 2 Dr. Staicovici Nr. 75, sector 5 T +32 (56) 24 96 35 T +358 (9) 5655 870 T +43 (1) 605 03-0 T +40 (21) 411 29 33 [email protected] [email protected] [email protected] [email protected] www.wienerberger.be www.wienerberger.fi www.wienerberger.at www.wienerberger.ro Wienerberger B.V. Wienerberger AS Wienerberger Teglaipari Rt. Wienerberger EOOD NL-5301LK Zaltbommel EST-43401 Aseri H-1119 Budapest BG-1172 Sofia Hogeweg 95 Kordoni 1 Bártfai u. 34. 4, Pimen Zografski Str. T +31 (418) 59 71 11 T +37 (233) 42 130 T +36 (1) 464 70 30 Business Building 2, Office 1 [email protected] [email protected] [email protected] T + 359 (2) 961 5460 www.wienerberger.nl www.wienerberger.ee www.wienerberger.hu [email protected] Wienerberger SAS General Shale Brick, Inc. www.wienerberger.bg Wienerberger cihlarsky F-67204 Achenheim USA-TN 37601, Johnson City prumysl a.s. OOO Wienerberger Kirpitsch 8, Rue du Canal 3211 North Roan Street CZ-370 46 Ceske Budejovice RUS-601010 Kirschatsch T +33 (3) 90 64 64-64 T +1 (423) 282-4661 Plachého 388/28 Gebiet Wladimir [email protected] [email protected] T +420 (38) 77 66 111 T +7 (49) 23 72 04 84 www.wienerberger.fr www.generalshale.com [email protected] wienerberger.ru@wienerberg- Wienerberger Ltd Semmelrock www.wienerberger.cz er.com GB, Cheshire, SK8 3 SA Baustoffindustrie GmbH Wienerberger Ceramika Wienerberger TOV Wienerberger House, Brooks Drive, A-9020 Klagenfurt Budowlana Sp. z o.o. UA-02660 M. Kyiv Cheadle Royal Business Park, Stadlweg 30/Südring PL-04-175 Warszawa Kraynya Str. 1B Cheadle T +43 (463) 38 38-0 ul. Ostrobramska 79 T +380 (44) 5945046 T +44 (161) 491 8200 [email protected] T +48 (22) 514 21 00 [email protected] [email protected] www.semmelrock.com [email protected] www.wienerberger.ua www.wienerberger.co.uk Bramac Dachsysteme www.wienerberger.pl Wienerberger Ziegelindustrie GmbH Wienerberger A/S International GmbH Wienerberger Slovenske D-30659 Hannover DK-2605 Brøndby A-3380 Pöchlarn tehelne spol. s.r.o. Oldenburger Allee 26 Kirkebjerg Allé 88 Bramacstrasse 9 SK-95301 Zlate Moravce T +49 (511) 610 70-0 T +45 (70) 13 13 22 T +43 (2757) 4010-0 Tehelná 5 [email protected] [email protected] [email protected] T +421 (37) 640 90 11 www.wienerberger.de www.wienerberger.dk www.bramac.com [email protected] ZZ Wancor Wienerberger AB Tondach Gleinstätten AG www.wienerberger.sk CH-8105 Regensdorf S-237 91 Bjärred A-8443 Gleinstätten Wienerberger Ilovac d.d. Althardstrasse 5 Flädie Graschach 38 HR-47000 Karlovac T +41 (0) 44 871 32 32 T +46 (771) 42 43 50 T +43 (3457) 2218-0 Donje Pokupje 2 [email protected] [email protected] [email protected] T +385 (47) 69 41 00 www.zzwancor.ch www.wienerberger.se www.tondach.at [email protected] Wienerberger Brunori SRL Wienerberger AS Pipelife International GmbH www.wienerberger.hr I-40020 Mordano (BO) N-3825 Lunde A-2351 Wr. Neudorf Wienerberger Opekarna Ormoz d.d. fraz. Bubano Strengenveien 31 Triester Strasse 14 SLO-2270 Ormoz Via Ringhiera 1 T +47 (35) 94 67 00 T +43 (2236) 439 39-0 Opekarniska 5 T +39 (0542) 56811 [email protected] [email protected] T +386 (2) 7410 520 [email protected] www.wienerberger.no www.pipelife.com [email protected] www.wienerberger.it www.wienerberger.si

134 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Chief Executive’s Review Corporate Governance The Company Review of Operations Segments Financial Statements Service Addresses Glossary Glossary

A glossary of the most important terms, abbreviations, and foreign language words is provided on the bookmark that can be found in this annual report. You can also download this information from our Website under www.wienerberger.com.

135 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Financial Calendar

March 27, 2007 2006 Results: Press and Analysts Conference in Vienna March 28, 2007 2006 Results: Analysts Conference in London May 8, 2007 First Quarter Results for 2007 May 10, 2007 138th Annual General Meeting in the Austria Center Vienna May 14, 2007 Deduction of dividends for 2006 (ex-day) May 16, 2007 First day of payment for 2006 dividends August 21, 2007 Results for the First Six Months of 2007: Press and Analysts Conference in Vienna August 22, 2007 Results for the First Six Months of 2007: Analysts Conference in London November 14, 2007 Third Quarter Results for 2007 November 15/16, 2007 Capital Markets Day

Information on the Company and the Wienerberger Share

Investor Relations Officer Thomas Melzer Shareholders’ Telephone +43 (1) 601 92-463 E-Mail [email protected] Internet www.wienerberger.com Vienna Stock Exchange WIE Reuters WBSV.VI Bloomberg WIE AV Datastream O: WNBA ADR Level 1 WBRBY ISIN AT0000831706

Wienerberger Online Annual Report 2006 http://annualreport.wienerberger.com

136 WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 Ten-Year Review

1,591.4 EBIT in € mill. 257.5 270.3 299.6 +11 Operating EBITDA in € mill. 226.3 231.4 274.5 307.8 221.2 302.6 349.9 405.4 428.4 471.9 9% 428.4

1,954.6 1,500

Revenues EBITDA Equity Capital employed in € mill. 797.6 936.1 1,297.7 1,568.5 1,613.9 1,508.7 1,635.4 2,031.5 2,289.4 2,598.2 14%

in € mill. 2) 9) 3.02 2.95 3.0 CVA in € mill. 33.2 15.8 -10.9 -17.7 -141.0 -59.5 3.0 28.6 5.9 -1.9

2.66 2.67 15.0 600 5)

7) Stock Exchange Data 2004 2005 2006 Change in % Employees 7,574 7,988 10,374 11,069 11,331 11,478 12,237 12,154 13,327 13,639 7% 2.54 2.54 2.5 542.2 12.9

12.2 500 in € 12.0 12.0 Earnings per share 2.54 2.66 2.95 +11

430.2 5) 2.0 7) Adjusted earnings per share in € 2.54 2.67 3.02 +13 Stock Exchange Data 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 CAGR 97-06

9.7 400 8.9 8.8 9.0 Dividend per share in € 1.07 1.18 1.30 +10 Earnings per share in € 1.43 1.64 1.74 2.86 -0.29 1.31 1.71 2.54 2.66 2.95 8% 1.5 295.8 300 6) 272.1

250.5 Share price at year-end in € 35.15 33.80 45.00 +33 Adjusted earnings per share in € 1.37 1.29 1.40 1.69 0.83 1.57 2.01 2.54 2.67 3.02 9%

1) EBIT 103.3 (+19%) 59.1 (+36%) 116.1 (+6%) 48.2 (-7%) -27.1 (-29%) Condensed Balance Sheet 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 CAGR 97-06

1,591.4 EBIT in € mill. 257.5 270.3 299.6 +11 Operating EBITDA in € mill. 226.3 231.4 274.5 307.8 221.2 302.6 349.9 405.4 428.4 471.9 9% 428.4

1,954.6 1,500

Revenues EBITDA Equity Capital employed in € mill. 797.6 936.1 1,297.7 1,568.5 1,613.9 1,508.7 1,635.4 2,031.5 2,289.4 2,598.2 14%

in € mill. 2) 9) 3.02 2.95 3.0 CVA in € mill. 33.2 15.8 -10.9 -17.7 -141.0 -59.5 3.0 28.6 5.9 -1.9

2.66 2.67 15.0 600 5)

7) Stock Exchange Data 2004 2005 2006 Change in % Employees 7,574 7,988 10,374 11,069 11,331 11,478 12,237 12,154 13,327 13,639 7% 2.54 2.54 2.5 542.2 12.9

12.2 500 in € 12.0 12.0 Earnings per share 2.54 2.66 2.95 +11

430.2 5) 2.0 7) Adjusted earnings per share in € 2.54 2.67 3.02 +13 Stock Exchange Data 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 CAGR 97-06

9.7 400 8.9 8.8 9.0 Dividend per share in € 1.07 1.18 1.30 +10 Earnings per share in € 1.43 1.64 1.74 2.86 -0.29 1.31 1.71 2.54 2.66 2.95 8% 1.5 295.8 300 6) 272.1

250.5 Share price at year-end in € 35.15 33.80 45.00 +33 Adjusted earnings per share in € 1.37 1.29 1.40 1.69 0.83 1.57 2.01 2.54 2.67 3.02 9%

1) EBIT 103.3 (+19%) 59.1 (+36%) 116.1 (+6%) 48.2 (-7%) -27.1 (-29%) Condensed Balance Sheet 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 CAGR 97-06

Market Positions

Concept and Layout: Mensalia Unternehmensberatung and Büro X Design Wien Clay roof tiles: Nr. 2 in Europe DTP and Reproduction: Büro X Design Wien, Michael Konrad GmbH, Frankfurt Translation: Donna Schiller-Margolis, Vienna Photos: Hertha Hurnaus, Marcel Köhler, Robert Marksteiner Printed by: Grasl Druck & Neue Medien, Austria WorldReginfo - c194dbc0-eb8b-4348-bdf2-1a2edaf63ec3 If you want to learn more about Wienerberger and there is no order card attached, you can ask for our annual or quarterly reports or add your name to our mailing list by contacting us at T +43 (1) 60192-463 or [email protected] All’s well The Year 2006 in Review

Market Positions